NYSE-listed wealth manager Noah Holdings, which provides wealth management services to high net worth individuals in China, is eyeing the country’s RMB 17.8trn retail fund market, according to Ryan Teng, investor relations manager at Noah.
Noah is planning to apply for a retail fund management company (FMC) licence, which will enable the firm to manufacture onshore funds for retail investors, Teng told FSA in a recent interview.
Noah Holdings already has an asset management arm, Gopher Asset Management, but the firm only provides its products to onshore and offshore qualified investors, particularly high net worth individuals, Teng explained.
As of the end of June, Gopher AM, which focuses on alternative investments, including private equity, real estate and hedge funds, manages RMB 133.6bn in onshore assets and RMB 25.8bn in offshore assets, according to Teng.
However, He did not elaborate on whether Gopher Asset Management will be applying for the retail fund management licence or if Noah will set-up a separate entity.
“It is also possible that we will just acquire a firm that already owns a retail mutual fund licence,” he said.
The advisory licence
Plans of establishing a retail funds arm come after Noah submitted an application for a mutual fund advisory licence in June, which is still subject to regulatory approval.
The mutual fund advisory programme, which was launched in October last year, allows managers and distributors to tailor investment options for clients based on their financial status and financial management needs and restricts fees to no more than 5% of investors’ net asset value.
Teng expects Noah to receive the licence by early next year.
So far, there are nearly 20 firms have received the licence, including five fund management firms, three online distributors, four banks and seven securities firms. Those that have launched their mutual fund advisory platforms include Tencent and the joint venture between Vanguard and Ant Financial.
Noah’s decision to provide mutual fund advisory is “closely related” with its decision to distribute more traditional mutual fund products to its clients, in a move to diversify its offerings away from alternative investments.
The decision to provide less risky products was also made in light of the Camsing incident, where around RMB 3.4bn in securities sold by Gopher AM for supply chain financing for Camsing International last year were in danger of default.
“We wanted to transform our strategy to make our investments more diversified. The Camsing scandal last year was also a wake-up call,” a Noah spokeswoman said previously.