The top two Sino-foreign joint-venture (JV) fund brands are ICBC Credit Suisse Asset Management and CCB Principal Asset Management, according to Broadridge’s inaugural China retail investor report.
“Sino-foreign JV fund firms generally enjoy good brand recognition among Chinese retail investors, as they occupy eight spots in the top-15 list for brand recognition, [but] they trend towards the bottom half of the table,” Yoon Ng, director of Asia-Pacific Insights at Broadridge Financial Solutions, a corporate services company, told FSA.
Moreover, these JV brands tend to reflect the influence and relevance of their respective Chinese parent groups, and those with a Chinese bank parent are usually ranked higher, according to Ng.
ICBC Credit Suisse is the fund tie-up between China’s largest bank, Industrial and Commercial Bank of China, and Swiss wealth manager Credit Suisse, while CCB Principal is jointly owned by China Construction Bank, one of the “big four” banks in China and US-based Principal Financial.
In fact, five out of the top six mutual fund brands out of 30 firms ranked are “pure play Chinese managers”, with Tianhong Asset Management ahead of the pack due to the popularity of its Yue Bao [money market] fund, said Ng.
The next highly-ranked are China Asset Management (which Broadridge considers a domestic manager, because of the limited role played by its foreign owner Citic Securities), E Fund Management, China Southern Asset Management and GF Fund Management.
The popularity and scale of a fund company contributes to brand perception, and these factors are ranked high among the 3,000 Chinese investors surveyed across four tier 1 cities — Beijing, Guangzhou, Shanghai and Shenzhen — reflecting the importance of branding in selling mutual funds in China, according to Broadridge.
Nevertheless, the survey found that foreign ownership is considered positive in brand perception by retail investors, “which can bring some moderate advantages to JVs”.
Among JVs, China International Fund Management (CIFM) stands out as benefiting more from its foreign than local parent, namely JP Morgan, which is a highly regarded brand in China, according to Ng.
A separate Broadridge survey, published in October, found that JP Morgan Global Asset Management scored second highest (behind UBS Asset Management) among overseas fund managers in terms of retail brand perception and local operational strength.
JP Morgan is the first overseas firm to acquire a majority holding in a fund management JV, when it won a bid in August 2019 to increase its stake in CIFM to 51%.
The China Securities Regulatory Commission announced in October that it would fully lift the foreign ownership limit for fund management firms starting from 1 April 2020, and more global firms are expected to take a majority stake in their Chinese JVs or even establish 100%-owned retail fund businesses in China.
“Strong brand recognition and longer-term local commitments, coupled with the right product and distribution strategies, have been the key for global asset managers to build a successful business in China,” concluded the survey.
Source: Broadridge China Navigator Report. Survey data is for mainland retail investors.
The survey also covered the mutual fund purchasing channel preferences of Chinese retail investors.
Mobile apps are popular across gender, age, location and wealth tier when investing in funds, with 76% of survey respondents using Alipay and 70% using Tencent WeChat for some of their purchases.
However, face-to-face purchases of funds is “still fairly common amongst the wealthiest groups as their needs tend to be more complicated”, according to the report.
ICBC is the most favoured channel for investing in domestic equity markets, and China Merchant Bank, which last week signed a distribution agreement for its newly-formed wealth management subsidiary with JP Morgan Asset Management, is the most popular channel for overseas investment.