Although little separates the two firms, JP Morgan Asset Management (JPMAM) clinched the top spot of the rankings because of several factors, including a doubling of its offshore China AUM in the second half of 2020, and a strong brand score.
Although UBS AM and third-ranked Blackrock led in offshore China AUM size and enjoyed 50% and 90% asset growth over the period, respectively, JPMAM’s 125% increase in assets translated into a proportionally higher pick up in its Broadridge China AUM score.
JPMAM also reinforced its lead in brand perception, ranking first in both Broadridge’s retail investor survey and professional fund buyers’ interviews.
A further push came from its acquisition of a 10% stake in China Merchants Bank’s wealth unit, according to Yoon Ng, Broadridge’s senior director of Apac insights.
Broadridge Financial Solutions, a global fintech firm with around $4.5bn in revenues, provides trading and communications infrastructure to banks, broker-dealers, asset and wealth managers and public companies.
Its China Power Ranking takes into account six key criteria across three different time horizons: current, near term and long term.
The criteria are China fund AUM, the extent of business scope, local operational strength, brand perception, global investment strength and China as a strategic priority.
Scores across the six criteria are weighted and tallied to determine the foreign manager that is best positioned in the market.
ALL TO PLAY FOR
“Competition at the top remains intense,” said Ng.
UBS AM has applied for mutual recognition of funds (MRF) approval to sell three of its Hong Kong-domiciled funds in the Mainland, and “if the firm receives authorisation in the coming months, UBS AM could take back the leading position, assuming there are no other major moves from JPMAM during the same time period,” she said.
However, it is not a two-horse race.
For instance, Allianz Global Investors made significant progress in 2020, rising four spots to take the sixth position. It doubled its China offshore AUM during the second half of 2020 and improved its brand score.
The firm has also benefited from its parent’s deep involvement in the China business. In early 2021, the German insurance giant obtained approval to set up China’s first wholly foreign-owned insurance asset management company.
Meanwhile, French manager Amundi has ramped up its efforts to grow its China business.
Its majority-owned wealth management joint venture (JV) with BOC WM, Huihua Wealth Management, has launched 20 wealth management products (WMPs) since December 2020 and raised about $1.2bn in assets.
“Despite the majority foreign ownership, the JV has been actively adopting localisation by hiring local leadership and investment professionals. Notably, the local team have senior members with JV experiences and overseas background, which helps with better cultural understanding,” said Ng.
Moreover, although some of the managers have seen a drop in ranking (Eastspring, AXA IM and Fidelity), all of them have seen an improvement in scores, according to Ng.
“This suggests that managers are not reducing their presence in China or doing poorly but rather, competition is rising and those who saw an improvement in ranking (JPMAM, Allianz Global Investors, DWS) have managed to do well across a range of factors,” she said.
“For example, Fidelity is at a disadvantage currently because it does not have a public mutual fund management company (FMC) licence,” she added
“But, it is now applying for a wholly owned FMC license and has shown China to be a priority market, hence things could change quickly too”.
The Broadridge report also examines how asset managers can navigate the $4trn Chinese bank WMP landscape, the largest segment in China’s asset and wealth management, which is expected to grow at 10.2% over the next five years after a regulatory shakeup.
China Power Ranking – Top 10 Global Managers
