The Asian investment market lacks choice in terms of strategies and asset classes, providing an opportunity for managers, a report says.

There needs to be greater choice in the type of asset classes and the investment styles used in making returns for investors in Asia, Cerulli Associates, the analytics firm, says in a new report.

Selectors at global and regional banks find limited product choices in traditional asset classes such as Asian mid-cap strategies, Chinese renmimbi bonds, Indian fixed income and European high yield, the firm says. This potentially offers opportunities for asset managers who have not yet made it onto selectors' focus lists.

The importance of wider choices is one of the findings of Cerulli Associates' report, Asian Fund Selector 2016: Striving for Longevity on Distributors' Shelves.

The report also found that significant numbers of fund selectors are choosing portfolios depending on how they think the macroeconomic environment - with central banks playing a major role - will turn out. For example, about 40 per cent of fund selectors at global and regional banks surveyed said they will add funds to cater to the impact of potential Federal Reserve rate hikes. A similar percentage said that while they will not add funds, they may adjust their recommendation lists to accommodate uncertainties in the Chinese capital market.

Cerulli also found there is a greater inclination among Asian gatekeepers to add liquid alternatives in 2016, given the uncertain macro environment. However, demand continues to be largely from the global private banks, as appetite for liquid alternatives among local distributors and insurance companies is still nascent.

Firms which do not have high brand recognition are at a disadvantage, the report finds, although the challenges are not insurmountable.

"Our research showed Asian fund selectors are also willing to work with new ideas and have allowed deviations in the past. Selectors may even relax their quantitative screening parameters, if the fund strategy is unique and timely for the current market environment," said Leena Dagade, a senior analyst with Cerulli. Dagade gave the example of a Swiss bank in Hong Kong which added a renminbi fixed-income fund from a local boutique asset manager well ahead of market cycles and before others spotted the trend.

To see another recent Cerulli report about Asia, click here.