Despite the downturn in markets in the second half of 2015, Chinese fund management companies saw revenues and profits rising in 2015, according to Cerulli Associates.
Many fund management companies saw double-digit and even triple-digit net profit growth during the year, it said
The firm’s research shows that net profits of six fund firms exceeded RMB1bn ($150m) in 2015.
China Asset Management was the most profitable with RMB1.41bn in net profit, followed by ICBC Credit Suisse Asset Management with a net profit of RMB1.29bn for 2015.
For the largest 20 managers in China, the average net profit margin was 30.4% in 2015 , while the net profit yield, which measures how much managers earn in basis points for each renminbi they manage, was 28.5 basis points. The firm does not provide any comparable figures.
Fullgoal Fund Management showed the best net profit yield last year at 56.9 basis points.
Institutions continue to play a big part in growing the revenues and profits of these fund management companies, it said.
“Institutional investors are estimated to have contributed one-third of assets under management as of the end of 2015. We understand that they prefer one-to-one segregated accounts because such accounts are more flexible in active management and in using leverage,” said Miao Hui, senior analyst at the firm who leads the China research initiative.
Institutional investors also welcome “customised mutual funds”, or funds launched for specific investors that meet the minimum number of subscribers, with lower leverage allowed, it said.
Still, it will be hard for the fund management companies to sustain 2015’s profit levels in 2016.
“While institutional investors’ participation in capital markets is expected to grow in 2016, profits [of the fund management companies] will be hard to maintain under current volatile market conditions,” Hui added.
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Chinese equity funds that are available for sale in Hong Kong have similar trading patterns to the Shanghai Composite Index over the past year, while the Shenzhen Composite Index has been outperforming as a result of the expected linkage between the Shenzhen and Hong Kong markets this year.
Source: FE Analytics
