Posted inChina

Barings rolls out first onshore China fixed income private fund

The firm is targeting both HNWIs and institutions in the mainland.

US-based Barings has launched its first onshore fixed income private fund management (PFM) product in China, which received approval from the Asset Management Association of China (AMAC) on Tuesday, according to a statement from the firm and AMAC records.

A PFM licence enables foreign entities to develop and sell funds investing in onshore assets to domestic qualified investors, which include institutional and high net worth investors.

The Barings China Aggregate Bond Private Securities Investment Fund No 1 is the firm’s second PFM product. The first fund, the China A-share Private Securities Investment Fund No 1, was launched in November last year.

The new fixed income fund will be offered to institutional and high net worth investors, Eric Jan, head of China investments for global markets at Barings, told FSA, but declined to name the firm’s distribution partners.

Managed by Michael Liu, an investment manager based in Shanghai, the product will primarily focus on China’s fixed income market and adopt a bottom-up strategy as well as fundamental credit analysis, according to the statement.

“The product aims to offer attractive income, capital stability and sustainable returns by investing in short duration credit bonds while the strategy will evolve as we expand upon our onshore investment capability,” Jan said.

Barings’ WFOE was established in August 2018 and obtained the PFM qualification in 2019, according to the statement.

In total, around 30 foreign asset managers have been granted PFM licences, with around 100 PFM products having been approved by the AMAC, its records show.

Barings has been participating in various cross-border programmes, such as qualified domestic institutional investor (QDII), qualified foreign institutional investor (QFII), the renminbi qualified foreign institutional investor (RQFII) and stock connect schemes for about 10 years, the statement said.

As of the end of September this year, Barings managed assets of $354bn globally, according to the statement.

On top of its PFM business, Barings also manages two qualified domestic limited partnership (QDLP) products in the mainland, which received approval from AMAC in January and August last year, AMAC records show.

A QDLP licence allows foreign managers to raise money domestically to invest in offshore traditional and alternative investments, including overseas equity and bond funds, hedge funds and real estate, within allocated quotas.

As of April, there were 28 foreign managers holding the licence offering at least 40 QDLP funds in China, according to a recent Fleishman Hillard report.

Part of the Mark Allen Group.