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Foreign fund managers in China see outflows

Most China asset management joint ventures saw net outflows in the first half, while money market funds were the big winners.

Close to 60% of China’s RMB 10trn ($1.5trn) mutual fund industry assets – both foreign and domestic funds – are comprised of money market funds and short-term bond-based cash management funds, according to FSA’s analysis of Morningstar data.

Data shows that in the first half of 2017, money market funds gathered assets, attracting RMB 529.7bn, while other fund categories saw outflows.

In particular, fixed income funds lost RMB 140.8bn in the first half, which is around 10% of the category’s total assets.

Both foreign and domestic mixed-asset funds lost RMB 97.4bn and the Morningstar category of “miscellaneous”, which includes index funds and guaranteed funds, lost RMB 54.5bn.

In contrast, equity funds saw net new inflows of RMB 9.5bn.

Largest foreign joint-venture asset management firms in China by AUM

Firm AUM (RMB) Net fund flows, 1H 2017 (RMB)
Harvest Fund Management (Deutsche Bank) 187.2bn -10.5bn
ICBC Credit Suisse Asset Management 173.0bn -10.5bn
Fullgoal Fund Mgmt (Bank of Montreal) 124.1bn -18.0bn
Penghua Fund Management (Eurizon) 106.6bn -21.4bn
Bank of China Investment Management (Blackrock) 83.7bn -1.5bn
CCB Principal Asset Management 73.1bn -7.5bn
Aegon-Industrial Fund Management 51.9bn  -614m
Lombarda China Fund Management 50.1bn -3.1bn
Bank of Communications Schroders 48.3bn -5.4bn
Invesco Great Wall Fund Management 46.9bn 307m
Data: Morningstar, 30 June 2017, excluding money market and cash-management funds

Taken in aggregate, foreign firm’s joint ventures and domestic asset managers suffered similar fates. Joint ventures had net new outflows of RMB 168.5bn and domestic companies saw net new outflows of RMB 179.4bn.

Their reported assets under management at the end of June 2017 were RMB 1.60trn and RMB 2.13trn, respectively.

Among the joint venture firms, Penghua Fund Management, which has partnered with Italy’s Eurizon, saw the biggest net outflows (RMB 21.4bn), mostly from its multi-asset and fixed-income funds. Fullgoal Fund Management, a joint venture with Bank of Montreal, lost RMB 18.0bn in the same fund categories.

Harvest Fund Management, the joint venture with Deutsche Bank, and the largest foreign joint-venture asset manager by AUM (excluding money market funds) lost RMB 10.5bn, mostly in fixed income funds.

The second largest foreign joint venture, ICBC Credit Suisse Asset Management, fell victim to a fixed-income whiplash, with net new inflows of the first quarter turning into outflows in the second, exacerbated by outflows in its equity funds.

Smaller joint ventures, such as Axa SPDB Investment Managers, Bank of Beijing Scotiabank Asset Management and HSBC Jintrust Fund Management, all saw small inflows of around RMB 4bn each.

Part of the Mark Allen Group.