Posted inAsset Class in FocusNews

Russell Investments readies onshore funds in China

The US firm had a joint venture with Ping An, which ended in 2015.

Russell Investments’ Shanghai-based wholly foreign-owned enterprise (WFOE) has received a private fund management (PFM) licence in China last week, according to records from the Asset Management Association of China (Amac).

Having a PFM licence enables foreign entities to develop and sell funds investing in onshore assets to domestic qualified investors, which include institutional and high net worth investors.

The licence comes after the firm established its WFOE in 2015, according to Tan Ying, Shanghai-based president and general manager at Russell Investment Management (Shanghai).

“We believe the opening-up of China’s capital market will provide more opportunities to global asset managers and companies like us. After years of practice and research in this market, we have considered China as one of the most important markets,” Tan told FSA.

Tan, who joined the WFOE in January last year, expects to launch its first PFM products by the second half. However, she did not say whether these funds will be equity, fixed income or mixed asset products.

“We are still assessing a range of product options, based on the return and risk appetite of potential investors, as well as the market environment.”

Other firms have also obtained the PFM qualification this year, which include Schroder Adveq and BEA Union Investment.

In total, there are two dozen foreign PFM licence holders that have launched 68 onshore funds, according to latest data from Amac.

Separately, Russell Investments also has licences for China’s inbound schemes, which allows foreign asset managers to invest in onshore markets. Russell Investments’ Ireland-based entity was granted a QFII (qualified foreign institutional investor) quota of $200m in 2014, while its Australia-based firm received the renminbi equivalent (RQFII) quota of RMB 906m ($129.54m) in 2017, FSA previously reported.

Russell Investments managed $307.4bn in global assets as of the end of 2019, according to its website.

A failed joint venture?

Before establishing its WFOE in 2015, the US firm had a public fund management joint venture with Ping An, which was established in 2011.

However, the joint venture ended “in failure with the JV dissolved after just four years due to intense strife between the shareholders” of both firms, Peter Alexander, managing director at Z-Ben Advisers, said previously.

Russell investments “quietly withdrew” from the joint venture because it believed that Ping An would benefit more than Russell, according to a Reuters report in 2015, quoting unnamed sources.

Part of the Mark Allen Group.