The China A-share Opportunities Private Fund 1 was registered with the Asset Management Association of China (Amac) in June.
The Blackrock fund raised about RMB$1bn ($146.74m) after a nine-day fundraising period through its distribution partner Citic Securities, according to local media reports.
The major feature of the product is that it charges well below other mainland private funds. Blackrock is charging a fixed management fee of 0.75% per annum and a performance fee of 10%. This compares with the typical fee structure of mainland private funds, which charge 2% management fee plus 20% of profit, according to local reports, citing investor notes published by Citic Securities.
“Blackrock may want to initiate a price war. If that is true, domestic private fund managers with poor performance will be hit the most,” a source in the private fund industry told China’s official International Finance News.
The report alluded to the low fee offering by citing a hedge fund manager, who said foreign players will play a role in enhancing the investment capabilities of China’s asset management industry and their participation should bring a wider range of investment products over the long term.
The fund’s factsheet was not available. However, the fund has a Luxembourg Ucits version, the China A Share Opportunities Fund, which can be used to understand the profile of the onshore product.
The Luxembourg fund, incepted in October 2017, is managed by Jeff Shen, the firm’s co-CIO of active equity and co-head of systematic active equity.
The fund invests in China’s A-shares through a quantitative stock selection strategy. By analysing social media data, the manager can look at the changes in investor sentiment and identify market trends. Since inception, the fund has returned -8.4%.
At the end of June, it had aggregate assets of $302.8m. The fund’s ongoing fee charge is 1.96%, according to FE Analytics.
The benchmark is the MSCI China A Onshore Net Index. At the end of last month, the fund’s top holdings included Ping An Insurance (5.14%), Agricultural Bank of China (3.41%) and Daqin Railway (3.05%).
This year, four more foreign asset managers were granted a private fund management (PFM) license. They are: Milan-listed Azimut, quant manager Winton Capital, hedge fund Bridgewater Associates and the latest Singapore-based APS Asset Management.
In addition, the foreign PFM license holders collectively registered 15 private fund products onshore, the latest being the Value Partners PFM China A Share Jade Fund 1.
BGF China A Share Opportunities’ performance since inception
