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China approves three for onshore products

UBS AM, Value Partners and Winton Capital have had more onshore products approved for launch via the private fund management (PFM) channel.

Products approved are the Value Partners China Fengtai No. 2 Private Securities Investment Fund, the UBS China Yufeng Bond Strategy No. 2 Private Securities Investment Fund and the Winton Capital China Multi-Strategy No. 1 Private Securities Investment Fund.

They received approval from the Asset Management Association of China (Amac) on Tuesday and will be sold to China’s institutional and professional investors, according to the regulator’s record.

A PFM licence allows foreign managers to develop and sell funds investing in onshore assets to domestic qualified investors.

This is Value Partners’ fourth onshore product this year and the eighth one since the wholly foreign-owned enterprise (WFOE) registered as a PFM firm in November 2017. In August this year, the firm registered its Value Partners China Hongxin 1 Private Fund.

UBS Asset Management now has eight PFM products, followed by Winton Investment Management (Shanghai), the WFOE of British quant fund manager Winton Capital which now owns seven onshore products.

UBS AM’s new bond product “follows the strategy of a fixed maturity fund with most bonds holding to maturity”, according to a spokeswoman for the firm. It will be distributed thorough private banks in China and the target is high net worth individuals, she added.

UBS Asset Management has been busy with onshore products. In October, the UBS China Balanced Multi-asset Private Securities Investment Fund No. 1 received approval from the Amac.

In September, the UBS China Yufeng Bond Strategy No. 1 Private Security Investment Fund also received approval from the regulator, FSA previously reported.

UBS’s Shanghai WFOE has 32 staff and registered capital of $30.5m. Value Partners has 26 staff in China and registered capital of $7.3m. For Winton Capital, the figures are 11 employees and $2m, according to Z-Ben Advisors.

FSA contacted Value Partners for further information, but it declined to comment while Winton Capital was unable to provide more details in time for publication.

Onshore rivals

As of 9 August this year, 21 foreign firms hold a PFM licence and collectively they have launched 46 products with RMB 5.4bn ($769m) in assets, according to a statement from the Amac.

Last month, UK-based Schroders registered the second fund of funds onshore, the Schroder China Diversified Income No. 1 FOF Private Security Investment Fund.

In September, the firm announced that it has debuted the China Multi Asset Dynamic Allocation FOF No.1 product, followed by the launch of three onshore funds in May 2019. The firm’s first onshore fund, the PFM China Total Return Zhihui No. 1 Fund, was introduced in 2018.

In August, Blackrock’s China A-share Opportunity Private Fund II also received approval from the Amac. The regulator’s records show that the firm now manages three PFM products.

Chinese regulators are slowly relaxing onshore fund rules in a move to open up its fund market to foreign players.

In June this year, regulators said that it will allow foreign PFMs to convert their business into a public fund management company (FMC), which would permit them to distribute products to the RMB 13.9trn retail investor base, without closing their PFMs first.

The market consensus is that a foreign PFM may be allowed to apply for conversion to FMC in 2021, but no guidelines or detailed timelines have been provided, Hui Miao, Singapore-based senior analyst at Cerulli Associates, said previously.

“In general, it is a good signal. It dismisses foreign managers’ concerns over the continuity of their private fund business and dismisses uncertainty about the continued market liberalisation amid US-China trade tension,” Hui said.

 

Part of the Bonhill Group.