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Pictet AM makes a move on China

The firm aims to participate in the Hong Kong-China Mutual Recognition of Funds (MRF) scheme.
Ancient door and traditional Chinese building.

Pictet Asset Management recently submitted an application to sell its Strategic Income Fund to mainland investors via the MRF scheme, according to records from the China Securities Regulatory Commission (CSRC).

The mixed-asset fund is the only Hong Kong-domiciled product that the firm manages, according to records from Hong Kong’s Securities and Futures Commission.

During the fund’s launch in 2016, the firm had intentions to sell it through the MRF if it met the scheme’s requirements, such as having a minimum AUM of RMB 200m ($30m) and having a one-year track record. The fund now has around $249m in assets, according to the factsheet.

The Pictet Strategic Income Fund

Source: Fund factsheet

The application comes at a time when mainland investors have poured nearly $1bn this year into MRF funds, mostly in products that carry an absolute return flavour.

In total, there are 14 northbound funds under the MRF scheme. Thirteen more products are awaiting approval. They include products managed by HSBC Global Asset Management, Fidelity, Aberdeen Standard Investments, JP Morgan Asset Management and Value Partners, according to CSRC records.

Slowly moving

The firm has been offering its funds via Citibank in China, which has a qualified domestic institutional investor (QDII) licence, according to a Hong Kong-based spokeswoman for the firm.

The QDII licence permits domestic firms, including institutions, fund managers and distributors, to offer domestic investors access to offshore assets. Citibank in China also distributes funds run by about a dozen other foreign managers, including Alliance Bernstein, Janus Henderson, Franklin Templeton and Pimco, according to the bank’s website.

Pictet AM has not applied to establish a wholly-foreign owned enterprise (WFOE) and other relevant licences to offer products in China, including the private fund management (PFM) or qualified domestic limited partnership (QDLP) licences.

The spokeswoman declined to comment on whether the firm plans to obtain any of these licences.

However, the intention to grow in China seems to be there. Renaud De Planta, who has been a partner of Pictet Group since 1998 and was recently appointed as senior partner, told European media earlier this month that the group plans to open a centre in Shanghai, but did not say whether it is for wealth or asset management.

Separately, Claude Haberer, who was previously Pictet Wealth Management’s CEO for Asia and now chairman for the region, told FSA that management hopes to bring in more Chinese clients, and will try to hire more bankers in Hong Kong, to focus on Greater China clients.

The MRF application follows the appointment of a new Asia ex-Japan CEO, Junjie Watkins, who joined in July. She replaced Amy Cho, who was poached by Schroders in November to serve as Hong Kong CEO.

The Pictet Strategic Income Fund versus its sector

Source: FE Analytics. In US dollars. Note: The fund does not have a benchmark index.

Part of the Mark Allen Group.