A survey of Hong Kong fund managers released this week revealed that most have positive views on the growth of their businesses over the next several years, with ESG investing as one of the primary drivers. The survey was conducted as part of “Vision 2025: The future of Hong Kong’s fund management industry,” a report conducted jointly by KPMG and the Hong Kong Investment Funds Association (HKIFA).

Overall, 53% of the fund managers surveyed reported that they expect growth of 11% to 30% in total AUM of their own business by 2025. In addition to ESG investing, the main growth drivers identified by respondents will be the opening up of Mainland China’s asset management industry, ongoing development of the Greater Bay Area (GBA), and technology-driven change. In terms of the top trends over the next five years, respondents identified regulatory change, fee pressure, the rise of the Greater Bay Area as a financial centre, an ageing population, and increasing connectivity to be the most impactful on their industry.

According to the report, ESG investing will become the “new normal,” as investor demand for ESG integration in the investment process grows, along with interest in sustainability-related products.  89% of survey respondents agreed that “providing sustainable investing-related products is increasingly important to clients.” The report also for a joint effort between regulators and asset managers to create clear ESG standards for the industry.

Commenting on the trend in ESG investing, Neil Macdonald, Head of Wealth and Asset Management Centre of Excellence, KPMG China, said:

“Within the next few years, as companies increasingly build ESG criteria into their core investment processes, investors may end up buying ESG products without knowing it because most, if not all, products will be ESG products. While some products will be marketed as ESG-themed, most others will have ESG lenses embedded in the investment process.”

One of the key challenges facing the industry over the next few years will be the shortage of ESG specialists, according to respondents. Vivian Chui, Partner, Head of Securities & Asset Management, Hong Kong, KPMG China, said:

“The greater focus on ESG investing will necessitate asset managers to find the right talent to lead and support their ESG initiatives. Survey respondents, however, expect there to be a shortage of skilled ESG specialists; this ranks first in terms of greatest skill shortages expected in Hong Kong among fund managers surveyed.”