Across Asia, investment managers are facing a growing challenge: how to meet increasingly diverse investor expectations while supporting a much broader range of products, distribution channels and technologies.
This was at the heart of our recent Calastone Connect Forums in Singapore, Hong Kong and Taipei, where we brought together industry experts to examine the changes shaping the future of investment management.
The discussions revealed an industry with considerable appetite for innovation. Active ETFs are expanding investor choice, tokenised investments are creating new distribution opportunities, and artificial intelligence is beginning to reshape operational processes. Yet delivering on these opportunities will depend on how effectively the industry can modernise the infrastructure that supports them.
For a region as diverse as Asia, where regulatory frameworks, investor preferences and distribution models differ considerably between markets, this presents both a significant opportunity and a complex challenge.
Changing investors, changing products
Opening the forums, Edward Glyn, our Head of Global Markets, examined how changing investor behaviour is challenging established approaches to investment management.
Digital platforms are influencing how younger generations discover and access investments, while demand for income, diversification and alternative assets is encouraging managers to rethink their product ranges.
The implications extend beyond product development. Investors increasingly expect convenient access to different asset classes, supported by consistent information and efficient servicing. Yet the underlying infrastructure often remains fragmented across products, markets and distribution channels.
This is particularly apparent in Asia, where the pace and direction of change vary considerably between markets.
In Taipei, our discussions highlighted the strength of Taiwan’s domestic ETF market and the impact of introducing active ETFs. Although the market has traditionally relied on distinct channels for mutual funds and ETFs, changing investor behaviour could gradually alter how those products are distributed and used together.
The challenge for managers is to respond to these shifts without creating additional operational complexity each time a new product or distribution model emerges.
ETFs enter a new phase of growth
The evolution of the ETF market illustrates both the opportunities and complexities facing investment managers as they respond to changing investor demands.
In Singapore, discussions explored the increasing popularity of active fixed-income ETFs, covered-call strategies and other income-generating products. These developments reflect demand for investment outcomes that extend beyond straightforward index exposure.
Another opportunity lies in ETF share classes of existing mutual funds. Such structures could allow managers to reach self-directed investors through exchanges while retaining their established fund offerings and investment strategies. However, as explored in our recent white paper, ETF Share Classes: Unlocking Distribution Without Reinventing the Operating Model, they also require specialist ETF infrastructure, including creation and redemption processes, authorised participant relationships and appropriate servicing capabilities.
In Hong Kong, the conversation highlighted the importance of product innovation and cross-border access. ETF Connect and the development of more sophisticated investment strategies are expanding the opportunities available to managers and investors, although product eligibility and local market requirements remain important considerations.
Taiwan provided a different perspective. Its established ETF market is evolving rapidly following the introduction of active products, but the relationship between ETFs and mutual funds remains different from that seen in the United States, where the boundaries between the two structures are increasingly converging.
Across the discussions, an important distinction emerged between expanding product choice and improving investor outcomes. More complex ETFs can offer useful income, diversification and risk-management characteristics, but their success also depends on investors understanding how those strategies behave in different market conditions.
The operational implications are equally significant. As products become more varied, managers and service providers must accommodate different valuation, liquidity and distribution requirements without creating separate infrastructure for every new structure.
Tokenisation finds practical applications
Digital investments generated some of the most forward-looking discussions. This was discussed in Singapore, where Simon Keefe, Head of Digital Assets at Calastone, examined the opportunities emerging between traditional investment markets and decentralised finance.
Previewing findings from Calastone’s research into demand from decentralised finance businesses, the discussion highlighted growing interest in regulated investment products that can be accessed through digital channels.
For asset managers, this creates an opportunity to reach new investor groups without necessarily changing the underlying investment strategy. Tokenised money market funds are a particularly relevant example, offering exposure to familiar, regulated assets in a form that may support more flexible transfer, settlement and collateral arrangements.
The Singapore discussion also highlighted the challenges of scaling these opportunities. Even where the technology is available, managers must navigate differing regulatory requirements, investor eligibility rules and established servicing arrangements.
Hong Kong added an institutional perspective, with particular attention to custody, compliance and interoperability between blockchain-based networks and existing financial infrastructure. These capabilities will be essential if tokenised funds are to move beyond individual implementations and become accessible across a broader range of platforms.
In Taipei, the discussion considered what tokenisation might mean for a market already experiencing substantial ETF growth.
Faster settlement was identified as a potential benefit of tokenised ETFs, but participants also questioned whether this alone would create sufficient demand. Investors and distributors need to see practical advantages, while regulators must be comfortable with the protections and processes supporting the new structures.
The conversation also explored the potential for tokenisation to make alternative investments more accessible. Automating documentation, administration and other processes could help reduce the cost of servicing complex products, making it more commercially viable to distribute them to a broader investor base.
These discussions reinforced the importance of treating tokenisation as a distribution and servicing opportunity, rather than simply a new technology for representing investment ownership.
AI moves beyond individual productivity
Artificial intelligence provided a fitting conclusion to the forums, with Jens Boegh-Nielsen of SS&C and Andrew Tomlinson of Calastone examining how AI could reshape investment management.
The discussion moved beyond familiar productivity tools towards the potential for AI agents to manage more complex processes across systems and teams.
Reconciliation, exception investigation and data processing were among the practical applications considered. These activities often involve significant manual effort, particularly where information must be gathered and checked across multiple platforms.
The next opportunity lies in coordinating entire workflows, allowing AI to undertake defined tasks while retaining human oversight and clear accountability.
That distinction is important. Automating individual activities may deliver incremental savings, but redesigning processes around new capabilities could create more substantial operational improvements.
The discussions also recognised the challenges involved, including governance, data quality, regulatory compliance and determining how much autonomy AI systems should be given.
As organisations move from experimentation towards wider deployment, these considerations will become central to how successfully AI is integrated into investment servicing.
Architecting Asia’s investment future
Reflecting on the discussions across Singapore, Hong Kong and Taipei, I was struck by how closely connected these developments have become.
The growth of ETFs, the emergence of tokenised investments, the diversification of investor portfolios and the adoption of AI all place new demands on the infrastructure supporting investment management.
Asia has an important role to play in shaping these developments. Its markets are progressing at different speeds and through different regulatory and distribution models, offering valuable opportunities to learn from one another.
Progress will require continued collaboration between asset managers, distributors, technology providers, service organisations and regulators. It will also require a clear understanding of where innovation delivers genuine value for investors, and where existing processes need to evolve to support it.
The industry’s ambitions are expanding rapidly, and its ability to deliver them will increasingly depend on building connected, adaptable and resilient operating models.
As we look towards the next phase of investment management in Asia, the foundations we establish today will help determine how successfully those ambitions become reality.
