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UBS AM, Invesco launch onshore funds in China

UBS AM's and Invesco's wholly foreign-owned enterprises (WFOEs) are the latest to launch onshore funds in China, targeting the country’s domestic high net worth individuals and institutional investors.
UBS AM, Invesco launch onshore funds in China
Shanghai landmark skyscraper in the lujiazui financial district at night, Shanghai, China.

UBS AM debuted its first onshore fixed income fund this week, according to a statement from the firm. It is the firm’s second onshore fund, following the launch of an equity fund in November last year.

“We were able to launch the new fund quickly thanks to the strength of our business in China and the fast localisation of UBS AM’s WFOE in the past year,” Aries Tung, UBS AM’s head of China strategy and business development, said in the statement.

The fixed income fund, the UBS (CN) China Ultra Short Income Bond Private Fund Series 1, will be managed by Brian Lou, a portfolio manager based in Shanghai, according to the statement. The fund will utilise UBS AM’s global capabilities in liquidity product management.

UBS AM launched the fund in response to China’s new asset management regulations, Lou explained in the statement.

“Recent advancement of financial reform in China has brought many benefits, including gradual implementation of new regulation that is standardising the bond market and improving yields,” he noted. “Upcoming regulatory changes require asset managers to find alternative sources of returns and seek active management investment strategies.”

Lou has 10 years of investment management experience, with seven years in fixed income, according to the statement. He first joined UBS AM in Shanghai in July 2017. Previously, he was a fixed income portfolio manager at Samsung Asset Management in Hong Kong, according to his Linkedin profile.

Invesco launched an equity fund, the Invesco Equity Value No. 1 Fund, last week, according to records from the Asset Management Association of China (AMAC). It was the firm’s first onshore product to be launched.

Invesco declined FSA‘s request for more details about the fund and its WFOE.

There are now 11 foreign asset management firms that are allowed to launch onshore products in China’s private market, which includes high net worth individuals and institutional investors. In total, 10 onshore products have been launched.

UBS AM’s future plans

UBS AM plans to launch several more bond funds in the country, with different duration characteristics, a UBS AM spokesman said. In addition, the firm is also developing quantitative and asset allocation products.

“We plan to develop several new funds this year and offer a full suite of products across all major traditional and alternative asset classes in the coming years, to give our investors more diversified opportunities,” Tung said in the statement.

Currently, UBS AM has 22 employees based in China, which include fund managers, legal and compliance, marketing, operations, sales and risk management professionals, the spokesman said. Without giving specific details, he added that the firm expects the number of employees to reach 40 in the coming 12-24 months.

UBS AM became Z-Ben Advisors’ top ranked foreign fund manager in China in terms of building a good China strategy. Besides its WFOE business, it has a joint venture firm in the country and holds a licence for the qualified domestic limited partnership (QDLP) scheme, which allows foreign fund managers to raise onshore capital to be invested offshore.

Part of the Mark Allen Group.