JPMorgan Asset looks to diversify, seeks $10b slice of Aussie pension funds

Photo: Bloomberg

Globally, JPMorgan Chase & Co. is a $1.7 trillion asset management powerhouse, yet in the world’s fourth-biggest pension fund market, it’s barely known.

Not for much longer, if Rachel Farrell, recently appointed the asset management unit’s first Australian country head, has her way. Farrell, 52, is aiming for a $10 billion slice of Australia’s pension savings by using the New York-based bank’s global reach to lure local investors looking to diversify abroad.

“This is a transformational opportunity,” she said in an interview Wednesday in Sydney. “Our current footprint is not in keeping with where we should be considering the resources that we are willing to put behind the effort.”

JPMorgan is vying for a piece of Australia’s pension market as Wall Street’s biggest firms expand their asset-management units to benefit from steady revenue streams that are less cyclical than investment banking and trading operations. Powered by a mandatory employer-funded savings plan for workers, Australia last year overtook Canada to become the world’s fourth-largest pension market, with $1.58 trillion in assets, according to a report from Willis Towers Watson released Wednesday.

Much of that money is allocated to cash or domestic stocks, and Farrell is betting that as the pool of money continues to grow, investors will begin to diversify and look further afield. She highlighted JPMorgan’s global expertise in infrastructure and real estate — two asset classes favored by Australian pension managers — and multi-asset solutions as key selling points to the Australian market.

Australia “is one of our main growth plays in the Asia-Pacific region,” she said.

Domestic Focus

Australian pension funds have 16 percent of assets in cash, compared to just 1 percent by U.K. funds, according to Wills Towers Watson. Australian funds are also predominately domestic-focused — 54 percent of their equities investments are in local stocks. Only the U.S., home to almost 50 percent of the global equity market, has a higher home-country bias, the report said.

That’s one reason why the big global asset managers are absent from the domestic industry ranking tables: Macquarie Group, Colonial First State and AMP Capital — all Sydney-based –are Australia’s three biggest asset managers, according to Willis Towers Watson.

Farrell, who is in the process of moving to the Sydney from Hong Kong, where she headed JPMorgan Asset’s sovereign and institutional Asia Pacific ex-Japan business, doesn’t intend to tangle with the local heavyweights and is not planning on starting locally-focused funds.

Five-Year Target

Investors are struggling to boost returns in a world of low yields and volatile markets, prompting them to turn to alternative assets such as property and infrastructure. Even hedge funds are coming under pressure to reduce fees after years of sub-par returns.

Even so, the business has been lucrative for JPMorgan. Net income in asset management, run by Mary Callahan Erdoes, increased 16 percent to $586 million in the fourth quarter of last year.

Farrell said the firm should be able to reach its target of $10 billion of assets in five years. While declining to give a figure for current assets under management, reaching the goal would represent “pretty significant growth,” she said.

While there are no immediate plans to ramp up the number of Australian-based staff, Farrell says the firm is committed to making it work.

“If I need to add resources and we start seeing asset growth we will add resources,” she said.

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Bloomberg

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.