Singapore-headquartered iFast Group’s wholly foreign-owned subsidiary (WFOE) in Shanghai last week received a private fund management (PFM) licence in China, according to records from the Asset Management Association of China (AMAC).
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.
Like its other operations in Singapore and Hong Kong, iFast’s China business initially started with the distribution of fund products, including PFM funds. However, as a distributor, the firm is not able to provide discretionary services to its clients, according to Keith Neo, general manager of iFast China.
“As a fund distributor, we are not able to provide discretionary services to help investors rebalance their portfolios,” Neo told FSA. “That is why our investors are required to view our [recommended] rebalancing actions online and approve these manually for us to execute those recommendations.”
He noted that many investors who bought portfolios via iFast’s platform often failed to follow the rebalancing actions, which resulted in them missing out on the additional returns that can be gained.
“But with the PFM license, investors will be able to tap on our discretionary portfolio management service where their portfolios will be automatically rebalanced on a regular basis. In addition, with the PFM license, qualified investors on our platform will be able to invest in PFM funds that can give them exposure to a wider variety of underlying assets,” he added.
For a start, the firm is planning to launch a fund of funds (FoF) product, which will be invested in a portfolio of mutual and private funds. Neo expects the offering to be launched by early next year.
iFast will be the main distributor of the product, but will also be looking for other distribution partners, including securities firms and private banks, he said.
Incorporated in May last year, the firm’s WFOE now has eight people, including three investment professionals, according to Neo.
In China, the firm’s assets under administration (AUA) stood at $101.5m as of the end of 2019, according to the firm’s financial report. It also established a joint venture last year with RFO Holdings, the Singapore office of Hong Kong-based Raffles Family Office. iFast China has a 30% stake in the JV, while the remaining 70% is owned by RFO Holdings.
Separately, Los Angeles-based Oaktree Capital’s WFOE in Beijing last week received approval to launch its first PFM product, the Beijing Oaktree Phase 1 Private Investment Fund in the mainland, just after it received its PFM qualification last month, according to AMAC’s record.
FSA sought more information from Oaktree Capital, but the firm declined to provide more details.
In total, around 30 foreign asset managers have been granted PFM licences, with at least 90 PFM products having been approved by the AMAC, according to its records.
At least eight foreign firms have received the PMF qualification this year, including Edinburgh-based Baillie Gifford, Paris-based Metori Capital Management, Oaktree Capital, Power Corporation of Canada, Income Partners, Russell Investments, Schroder Adveq and BEA Union Investment.
Oaktree Capital also has a Shanghai-based WFOE, Oaktree Overseas Investment Fund Management (Shanghai), which was established in 2013 and manages two qualified domestic limited partnership (QDLP) products.
The QDLP scheme allows foreign fund managers based in the city, within assigned quotas, to invest in offshore traditional and alternative investments, including overseas equity and bond fund funds, hedge funds and property.