Posted inNewsResearch

How did China’s AM joint ventures do in 2017?

Foreign asset management joint ventures in China did not escape the industry-wide outflow of capital from actively-managed mutual funds in 2017.
How did China's AM joint ventures do in 2017?

There are 22 asset management joint ventures established in China by managers ranking among the top 50 global firms. At the end of 2017, the joint ventures had 989 actively-managed mutual funds (excluding money market funds) on the domestic market.

The aggregated AUM in these funds was RMB 885.4bn ($140bn) at the end of 2017, down slightly from RMB 894.5bn a year earlier, according to data from Morningstar. (Data for around 50 of the 989 funds is not available.)

During the year, investors withdrew an estimated RMB 188.9bn from the JV’s mutual funds, with aggregate net outflows across most asset classes.

The decline brought down the marketshare of foreign asset management JVs, by AUM, to 22.6%, down from 24% a year earlier.

(The figures all exclude money market funds, which in some cases account for a large portion of AUM).

The leaders

Minsheng Royal, a joint venture with the Canadian bank RBC, was the most successful net asset gatherer, as inflows into its two short-term bond funds have more than offset outflows from long-term bond and mixed-asset funds.

BOC International, a joint venture with Blackrock, manages only one fund with large assets, the AnJin Bond Fund, which was launched in the fourth quarter of 2016 and saw a big uptake in the early 2017.

Short-term bond funds helped Citic-Prudential attract new assets, while HSBC Jintrust’s top asset gatherer was its Large Cap Equity Fund − mostly in the first two quarters of 2017.


China’s foreign asset manager JVs (RMB)

Joint Venture Number of funds AUM Dec 2016 AUM Dec 2017 Est. flows 2017
Minsheng Royal (RBC) 42 26.69bn 45.81bn 11.51bn
BOC International (Blackrock) 13 35.24bn 45.05bn 9.29bn
Citic-Prudential 70 31.39bn 52.74bn 6.82bn
HSBC Jintrust 17 13.09bn 21.25bn 4.67bn
Aegon-Industrial 15 41.2bn 55.51bn 4.21bn
AXA SPDB 22 21.18bn 27.04bn 701m
China International (JP Morgan) 56 39.36bn 58.27bn 22m
Deutsche Bank (China) 9 843m 768m -170m
Franklin Templeton Sealand 29 13.03bn 16.53bn -617m
SWS MU (Mitsubishi UFJ) 41 26.75bn 35.6bn -1.08bn
Invesco Great Wall 57 42.93bn 51.07bn -2.05bn
Bank of Communications Schroders 65 56.18bn 61.72bn -2.36bn
Morgan Stanley Huaxin 23 15.69bn 13.15bn -2.77bn
ABC-CA (Amundi) 31 17.81bn 16.97bn -4.27bn
Everbright Pramerica (Prudential) 34 37.51bn 41.03bn -5.04bn
Guotai (Generali) 96 60.17bn 91.35bn -7.63bn
HFT (BNP Paribas) 42 21.2bn 20.3bn -8.51bn
GTJA-Allianz 37 22.47bn 15.95bn -10.66bn
Manulife Teda 49 27.49bn 20.71bn -11.95bn
UBS SDIC 58 31.03bn 20.87bn -14.28bn
CCB Principal 84 103.83bn 80.18bn -30.79bn
ICBC Credit Suisse 99 209.42bn 93.56bn -123.96bn
Data: Morningstar, as of 31 December 2017, in renminbi. All figures exclude money market funds
Note: December 2017 data is not available for some funds (around 8% of the JV universe, or 6% by AUM). In those cases FSA used the most recent data available.


Weighing money market funds

Money market funds, which are more like certificates of deposit and do not involve active management, are extremely popular in China. The data above has excluded these products. If they are included, a different picture emerges because they tend to comprise a large part of JV assets.

For example, ICBC Credit Suisse has the largest mutual fund business among JVs in China, with RMB 509.9bn of total AUM at the end of 2017. However, 82% of that AUM is from its money market funds. The firm’s other fund categories saw the biggest outflows among all JVs, to the tune of RMB 124bn.

The second largest firm is CCB Principal, with RMB 425.5bn in AUM, 81% of which are money market funds.

Both joint venture firms grew their business substantially in 2017 due to inflows into money market products that offset losses in other funds.

Part of Mark Allen.