The firm, which is one of two Chinese wealth managers listed in the US (the other is Jupai), plans to move away from just being a distributor of products and manage more discretionary mandates for clients in China.
“We are aiming to be a global Chinese private bank,” Ma told FSA.
Currently, it manages around $500m in discretionary mandates, which includes a RMB discretionary fund and 50 managed accounts, according to Ma.
“Sometimes our clients say, instead of getting product recommendations from relationship managers, why don’t I just give you a block of money?,” he said.
It is also planning to launch an ESG discretionary managed account for Chinese family offices, he added.
The firm has similar plans for the Hong Kong operation, which was set up in 2012 and has ten fund selectors on staff. This year, a global family office unit, headed by Albert Hui, was set up to distribute products and manage assets for family offices.
Ma noted that the firm has no concrente plans yet of setting up discretionary services in Hong Kong.
Offshore plans
Noah’s wealth management business has been focused mostly on mainland clients. As of the end of June, the firm’s total number of registered clients was 164,278, with each client having a net worth of around $35m-$40m. The average transaction size of each client is around $1m.
“We focus exclusively on the ultra high-net-worth and family offices in China,” Ma said.
Noah distributes traditional mutual funds and alternative fund products. There are around 4,000 funds trying to pass the firm’s three-level product approval process, which is overseen by 150 fund selectors, Ma said. Every year, only around 150 products are distributed to clients.
The firm has expanded offshore, opening offices in Canada and Australia, where it will distribute products to Chinese UHNWIs.
In Canada, Ivy Zhang is the Vancouver-based CEO. Zhang previously worked for the wealth management unit of Investors Group, an affiliate company of Canada-based Power Financial Corporation, where she provided wealth management and wealth transfer services to high net worth individuals, according to Ma.
He expects services in Canada and Australia to launch this year.
“Don’t underestimate the immigration of Chinese to Canada and Australia. Those communities are more underserved compared to those in the US,” Ma said.
The firm is staying clear of wealth management in the US because it has an intensely competitive industry with unique regulations.
“We are taking it step-by-step because in terms of regulation and compliance, it is quite different from other countries,” he said.
The firm’s asset management unit, Gopher Asset Management, has an on-the-ground presence in California, but staff only engages in research on US private equity and venture capital opportunities, Ma said.
Fixed income expansion
Gopher AM, of which Ma is also a co-chief investment officer and partner, specialises in alternative investments, such as fund of hedge funds and private equity in China. It manages $21bn in assets.
Noah’s wealth management business also distributes Gopher products.
Gopher is hiring more investment professionals for consumer finance and fixed income in Shanghai, Hong Kong and the US, according to Ma.
Fixed income has become popular among Chinese investors, Ma said, adding that during the first half this year, Noah’s wealth management business distributed around RMB 45.6bn ($6.92bn) worth of fixed income products, compared to RMB 33.1bn during the first half last year.
Last year, fixed income accounted for 63% of total product assets distributed by the firm.
Transaction value of distributed products (RMB bn)
|
2014 |
2015 |
2016 |
|
| Fixed income products |
40.2 |
36.6 |
64.5 |
| Private equity fund products |
12 |
31.9 |
27.5 |
| Secondary market equity fund products |
8.9 |
28.1 |
7.8 |
| Others |
3.2 |
2.4 |
1.6 |
| Total |
64.3 |
99 |
101.4 |
Source: Noah Holdings
Ma added that he sees opportunity in distributing consumer finance products.
“The credit situation in China is tightening, and consumer financing products are a way for clients to diversify away from just pure property-related or traditional fixed income products.”
Separately, Ma said that the firm is expected to launch a global macro foreign exchange fund of funds.
“We think the global equity market volatility will increase and we believe this is the best strategy to capture market volatility.”
