The Zhao Zhi Wu You Target 2035 Fund is the first collaborative product between CMBWM and JPMAM after their expanded strategic partnership, which saw JPMAM take a 10% stake in the Shenzhen-based wealth manager last week.
The fund will invest in “comprehensive and diversified global assets”, and it is the first target date fund adopting a “glide path” design in China’s bank wealth management space, according to a statement by the firms.
Target-date funds — also known as a life-cycle products — are mutual funds or ETFs structured to grow assets in a way that is optimised for a specific time frame. The structuring of these funds addresses an investor’s capital needs at some future date, and typically, investors will use a target date fund to apply to their onset of retirement.
“The target-date fund launch is designed to serve the growing need of onshore retail investors for long-term retirement investing, which has been a strategic growth area in the onshore market,” a JPMAM spokeswoman told FSA.
Their asset allocation is usually designed to gradually shift – or take a glide path — to a more conservative profile to minimise risk when the target date approaches. The CMBWM fund can invest in equities, fixed income, commodities and derivatives, according to its prospectus.
JPMAM’s joint venture, China International Fund Management (CIFM), acts as the investment advisor for the product, which will be open for subscription to the public from 30 March to 6 April. China Merchants Bank will distribute the fund.
The annual management fee is 0.45% and the subscription fee is 1.5%, said the spokeswoman.
It is the second collaborative product since China Merchants Bank (CMB), CMBWM and JPMAM first formed a strategic partnership in 2019. The first product was a China income strategy, launched last year.
CMBWM and JPMAM said that they will expand their collaborative product line to provide a range of target date funds, as well as multi-asset and fixed income+ products.
Earlier this month JPMAMM said that it intends to invest about RMB 2.67bn ($410m) in CMB’s asset management subsidiary, CMBWM, for a 10% equity stake. The transaction is subject to approval by the China Banking and Insurance Regulatory Commission.
“Investing directly into CMBWM by taking a 10% stake, we believe is a strategic and efficient way to accelerate our cooperation. It’s also a natural extension of the strategic partnership we announced in 2019, and builds on the product and distribution momentum that we’ve already established together,” a spokeswoman told FSA at the time.
CMBWM, a wholly-owned subsidiary of CMB, was incorporated in Shenzhen in November 2019 with a registered capital of RMB 5bn. It specialises in launching public and private wealth management products and providing financial advisory and consulting service.
CMB was founded in Shekou Industrial Zone of Shenzhen in 1987 and is China’s first joint-stock commercial bank wholly owned by corporate legal entities.
JPMAM, which has a global AUM of $2.3trn, according to the statement, is also pending regulatory approval for 100% ownership of CIFM. In August 2019, it became the first foreign company to hold a majority stake in a Chinese mutual fund business, when it paid $35m for an additional 2% stake in CIFM, a joint venture it had originally set-up with Shanghai International Trust in 2004.
Headquartered in Shanghai, CIFM employs around 300 staff and has $27bn of AUM, as of December 2020, according to JPMAM.