Reflecting the global ambitions of Asian asset managers, South Korean-based Mirae Asset Management this summer quietly expanded its stateside presence, hiring four wholesalers across the country.
Tasked with helping guide the growth of Mirae's U.S. arm is John M. Capeci, a 21-year industry veteran who previously served as a vice president and senior account manager across distribution at Prudential.
Though now manages $5.3 billion in assets in the U.S., much of Mirae's efforts are dedicated to educating advisors and investors about emerging markets Capeci says. He tells Money Management Executive that despite concerns about China, Asia's growth story will continue.
What's the company's perspective on its push into the U.S.?
We've clearly ramped up this year. We've added approximately seven people total. There's one more spot to fill from an internal wholesaling perspective. This has been part of a structured growth plan where we started in the U.S. office five years ago launching funds. Now that we have distribution at quite a few partners and distributors, we've got the five-year track record, we wanted to make sure we were positioned in all of the major money centers around the country. This growth has helped us accomplish that.
Has Mirae managed to get its funds on any of the larger U.S. platforms?
We have, and we've been very lucky to get on most of the wirehouse platforms. We're available to the independents, the regionals and clearing firms as well. We're positioning products now on some retirement platforms as well. That's driven the growth and the need for an expanded footprint around the country.
What's Mirae's strategy in expanding its U.S. distribution outreach?
The emerging market space that we're in is complex, and it certainly requires an expert for people to navigate the sector. It's one where there can be a lot of misconceptions - there's a lot of headline noise out there. We just feel we need to have on the ground coverage in the markets where we distribute our funds, so we can provide the best service to financial advisors and to clients, so that they understand all the nuances that exist in emerging markets.
As I said, there can be a lot of noise in the press, and we're here to educate advisors and provide expertise and oversight into the various countries that we invest in. If you look at Mirae as an investment division, we have investment personnel on the ground in the emerging markets where we invest in, and we see that as important. So we've cloned that model for the United States.
What are some of the questions then that Mirae fields? About the Asian market in particular, or questions about the firm itself?
Branding has certainly been a challenge. Outside of the U.S., obviously in Asia and even other parts of the globe Mirae is well-known, but within the U.S. it's a branding effort, and that's part of the reason why we've got our wholesaling team spread out throughout the country.
But part of that is talking about the nuances of investing in emerging markets. These are countries and various regions that are all very different from one another, and they are at different points in economic lifecycle.
It's important to understand the differences in the emerging markets. Just because one nation is having economic challenges of a certain type that doesn't mean the entire emerging markets space is struggling. For example, some of the emerging market countries will benefit from lower oil prices and commodity prices while others suffer.
Understanding this is what we are best at, and helps us make investments in sound companies. We do bottom-up fundamental research and we want to convey to our investors and to financial advisors the expertise we have, so that they aren't misconstruing what's going on in certain marketplaces. We are here to dispel a lot of misconceptions. We want people to understand whatever happens in China, that doesn't mean something bad is going to happen in Korea or even Indonesia. These are very distinct marketplaces.
There's a lot of interest from Western asset management firms in expanding into Asia. Mirae's expansion here then seems to be the opposite flow.
Absolutely. We've obviously had a very large presence for many years in Asia, and we established ourselves as emerging market experts by having offices throughout the globe in emerging markets. We have over 120 dedicated professionals spread out in the emerging markets. We felt we needed to be in those markets, have an investment process developed and a team. And we wanted to bring those strategies that we developed to the U.S. marketplace, which is obviously very large in terms of assets and opportunities. We want to bring the expertise we have of the developing market place into the developed market space.
How did Mirae determine this was the right time for its U.S. expansion?
The parent firm looked at the overall opportunity that the U.S. represents because of its size. There are certainly competitors that we will come up against, but we think we have a unique perspective. We're founded and based in the emerging markets, so we're not trying to run emerging markets strategies from the U.S. We have an investment team here, but our investment footprint is really global. We feel if you're going to run money in the emerging markets, you really have to understand the nuances of the marketplace, you have to understand the traditions and cultures, and understand the potential pitfalls and geopolitical issues that exist there. We made sure as a company we were well-situated there.
Being that the firm is five years in the U.S., what's the objective going forward?
In the next year, the objective is to continue to grow the brand, recognition and continue to distribute our mutual funds to the partners we have. We do have a few partnerships that should come online over the next six months. It's really to educate the advisors on what Mirae brings to the table, not just in terms of products, but also research. We offer a number of white papers, and we are often questioned about different countries and the challenges they face. Since we are based in Asia we bring a unique perspective, and in times of turmoil we are able to leverage those resources to bring timely information back to those advisors. So I think over the next year we'll continue to do that and with this larger team, we'll be able to touch upon more financial advisors and clients throughout the country.
Something you had mentioned earlier - is there sometimes confusion about differentiating between South Korea and China?
There are folks that get confused about if there is a particular economic issue in a country or specific region, and how does it impact its neighbors. If China has growth problems, how does that affect South Korea, Indonesia, the Philippines, and vice versa?
There are nuances to each one of those economies. They are all at different points of growth, possess different demographics. Even something like Chinese markets and the A Shares versus the H-Shares, the availability of those shares and can foreign investors buy certain share classes. We get a lot of those kinds of questions and the expertise of our wholesaling team allows them to provide simple to understand answers that can relate to financial advisors, who can in turn provide them to their clients.
There's also decades of misconceptions. When people here think of Vietnam, they think of the Vietnam War, and the same thing with Korea. But those events happened of course many years ago. Those economies are now thriving and represent great investment opportunities. The emerging markets are growing, and its populations want a better lifestyle. The consumers who are going through a growth spurt like we did in the middle class with the Baby Boomer generation in the U.S. have now taken root globally. We've tried to position ourselves to take advantage from an investment standpoint, and that's what we're trying to explain to financial advisors. Globally there are demographics out there that are booming,
What is the recruitment challenge then here in the U.S., given the branding issues that your team faces?
We've actually had quite a bit of interest in the positions we've had open. That is the result of wholesalers and investment professionals realizing that the emerging markets are a very interesting space. With the demographics there's potential for a lot of pure economic growth, it's an exciting story.
There's a lot of large cap growth for sale in the U.S.; municipal bonds and what have you. And there's a decent number of emerging market funds. But there's not a lot of folks who are just dedicated to that space, and that's what we do. So I think that has attracted a lot of people, and from the candidates we've sat down with, they are just intrigued with the decades-long growth potential for the space, and particularly for U.S. investors who are getting more comfortable with this space.
Given the interest you observed, how much more growth is Mirae expecting after this latest recruitment drive?
We've bitten off a lot this year, we've hired a lot of people and have all the major U.S. money centers covered. But I can certainly envision next year that we will be hiring some people to cover some of the marketplaces that we don't have a huge presence in right now, perhaps in the Midwest. There may be other opportunities for growth within the firm as well. We are going through rapid growth and I definitely see additional positions opening up.
How is your firm measuring up the competition here in the emerging markets space? Any takeaways from their approaches here in the U.S.?
There are other funds out there that have garnered assets. But one of the interesting things we've come across lately is the space over the last couple of months has gone through a lot of geopolitical noise. There's been a lot of concerns about the China marketplace. What we've found is that financial advisors are really looking for someone to lean on and help them explain to clients what are the impacts on their portfolios. We think it's a great time to continue to plant seeds. Just because there's some volatility that doesn't mean the decades-long theme of growth is going to suddenly vanish.