Asset managers are ramping up their presence in Asia to tap the cash of the growing middle class but some industry managers are warning that the quick bucks these funds are chasing may be elusive.

Establishing an identity and building distribution networks takes time. Regulatory bottlenecks and a stubborn attachment to traditional bank savings will also act as a brake on business.

Asia will continue to hog the limelight as a source of new assets but it won't be the next gold rush, Amin Rajan, chief executive of consultancy Create, said at the Fund Forum in Monaco.

So far, market penetration has progressed at a snail's pace.

Those looking for a quick buck will be disappointed, said Tom Brown, partner at KPMG.

Organizations which can take a long term view and ride out any short term issues will be the winners. It takes time to establish your brand and ability to distribute in those markets.

Global asset managers and Forum attendees Aviva Investors , BNP Paribas IP , Principal Global Investors , Allianz Global Investors , and T Rowe Price are all targeting Asian expansion.

But Peter Baynham, Mercer's EMEA head of M&A Consulting, believes the rush to Asia will turn out badly for some.

Someone will come a cropper, he predicted, speaking to Reuters ahead of the event.

It's one of those things that seems like a good idea around the boardroom table but the challenges are a lot greater than you think. It is not the first time that financial institutions have gone to Asia.

He pointed out that in the 1980s it was popular to seek a license to operate in Japan, a market seen as offering huge opportunities. But tapping the large savings pools, the bulk of which remain stubbornly lodged with the Post Office, has proved more difficult than anticipated.

PGI and Aberdeen Asset Management have made progress -- Aberdeen through a distribution deal with Mitsubishi UFJ Trust and Banking Corp, which took a 17 percent stake in Aberdeen, and PGI through winning a mandate from the Government Pension Investment Fund, the biggest pension fund in the world.

Once Japan's government has given a Western company the nod, this tends to open the way for other Japanese pension schemes. Yet McCaughan acknowledges the difficulties in the region when trying tap retail investors: They're very attached to their bank deposits.


China has also proved a tough nut to crack. F&C Asset Management , which formed a fund management joint venture in April 2009 with China's Hua Xia Bank, is still waiting for its license to operate.

The authorities like the tradition and continuity that F&C represents but the regulators are reviewing their experiences with the existing joint ventures before they grant any new licenses, said Alain Grisay, chief executive of F&C.

So all the applicants since 2009 have been put on ice until the end of the regulatory review of the first phase.

Alain Dromer, chief executive of Aviva Investors, said his firm was also affected by this delay.

We are hoping this will open up for us next year, he said. Initially we thought the growth might be more immediate in retail but some institutional business is also now coming available.

India has also proved frustrating for managers with the regulator SEBI banning front-end commission overnight in 2009, which has prompted advisers to switch to selling unit-linked insurance products.

This regulatory arbitrage has hurt the industry and investors because they are not getting the best product for their needs, said Todd Rupport, chief executive of T Rowe Price Global Investment Services.

Not everyone is convinced that asset managers should be spending all this money on expansion however, particularly as the market outlook is still so uncertain.

During the crunch asset managers were forced to refocus on their core markets, Cerulli's managing director Shiv Taneja points out.

What the industry lost sight of, despite all the high growth numbers coming out of emerging markets, is that some 80 percent of global AUM is still in about four or five core markets in the US and Western Europe, he said.

Taneja believes managers will continue to build in emerging markets where they already have a big presence, or where someone sees an opportunity to take market share by taking the riskier route of swimming against the tide.

(Editing by David Cowell)