Neuberger Berman launches onshore China fund

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Neuberger Berman has joined the growing number of global fund managers who have launched an onshore private fund via a wholly foreign-owned enterprise (IM WFOE) in Shanghai.

Neuberger Berman launches onshore China fund

Neuberger Berman has become the sixth foreign manager to roll out a private fund product, according to the records of the Asset Management Association of China (Amac). Private funds are available for sale only to domestic qualified investors (high net worth individuals and institutional investors).

The firm’s filing to Amac said the fixed income product was incepted on 28 February. The fund is managed by Peter Ru, the firm’s Shanghai-based senior portfolio manager, according a Hong Kong-based spokeswoman for the firm.

Ru joined NB in November last year around the time the firm obtained its private fund management (PFM) license. The spokeswoman added that plans to broaden onshore product offerings, possibly including equity and multi-asset funds, are under consideration.

Fidelity International is another PFM license holder that offers fixed income products. The firm has launched a total of three onshore funds, two of which invest in China domestic bonds.

In 2017, ten IM WFOEs obtained approval from Amac to launch private fund products to domestic qualified investors. Earlier this month, Italian asset manager Azimut was also granted the license, making the total 11 PFM license holders.

Chinese authorities impose a six-month deadline for the first product launch on new license holders. Therefore, by August, at least five more products will likely be launched by foreign managers in the mainland.

Operating an IM WFOE is the prerequisite to launching an onshore private fund. As of today, there are at least 28 IM WFOEs established by foreign managers, with the latest being Eastspring Investments and Pimco, both of which received approval in March. Amundi Asset Management has also expressed interests in setting up a WFOE in China, the firm’s CEO for North Asia Zhong Xiaofeng said earlier.

The total investable assets of HNWIs are expected to more than double to reach $17trn by 2022, according to a report by Oliver Wyman, a consulting firm. In line with the growth of the HNWI segment, the report said that running an IM WFOE with a PFM licence is “the most tangible route” for global asset managers looking at opportunities in China.

According to Amac data, the $2.16trn private fund industry in China sources 65% of its assets from HNWIs.

 

Firm

PFM licence obtainedProducts launched

Fidelity International

January 2017

China Bond No. 1 Private Fund

China Equity No. 1 Private Fund

China Bond Opportunity No. 1 Private Fund

UBS Asset Management

July 2017China Equity Private Fund Series 1
Fullerton Fund ManagementSeptember 2017

Fullerton Absolute Return China A Strategy Series 1 Private Fund

Man Investments

September 2017英仕曼宏量1號私募基金

(A quantitative hedge fund, for which the firm does not use an English name.)

InvescoNovember 2017

Neuberger Berman

November 2017路博邁債券1號私募基金

(Chinese name only)

Value PartnersNovember 2017

Value Partners PFM Neo-China A Share Fund 1

Aberdeen Standard Investments

December 2017
BlackrockDecember 2017

Schroders

December 2017
AzimutFebruary 2018

Source: FSA

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