Posted inProduct NewsNews

UBS AM quietly builds onshore fund base

In 2020 alone, UBS AM has introduced seven onshore funds for sale to China's domestic investors via the PFM scheme.

The UBS (CN) China Yufeng Fixed Income Bond Strategic Series 5 Private Securities Investment Fund received approval from the Asset Management Association of China (Amac) yesterday, according to Amac’s records.

Shanghai-based Brian Lou, manager of the fund, said it’s an overseas fixed maturity fund strategy that aims to lock in expected returns within a fixed period.

The product has been launched and it targets China’s onshore high net worth investors, Adrian Chen, general manager at UBS Asset Management Shanghai, the firm’s wholly foreign-owned subsidiary (WFOE) told FSA.

The new fund is the firm’s seventh product that has been approved via the private fund management (PFM) scheme this year.

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.

UBS AM Shanghai has issued nine bond products, three of which were launched in 2020.

“We seek alpha opportunities based on the safety cushion of allocations to [G3] government bonds and high grade credit bonds in the second half of the year.

“Meanwhile, we have been tracking the credit bonds of industry leaders in real estate, infrastructure, consumers, healthcare, nonferrous metals and machinery. All of these require asset managers to conduct careful and top-down research,” Lou said.

Onshore base

In total, the firm manages 16 PFM products, which is the largest number of any foreign asset manager, followed by Hong Kong-based Value Partners which has 11 PFM funds.

This year, UBS’ Shanghai WFOE received approval from the Amac for two PFM products in March.

Earlier in February, the firm received approval for four PFM products, FSA previously reported.

Chen said that more PFM products are planned in 2020.

UBS AM also manages one qualified domestic limited partnership (QDLP) product, the A&Q (China) Neutral Alpha Strategy Leverage Fund, according to Amac records.

The QDLP scheme allows foreign managers to raise money in China, with assigned quotas, to invest in offshore traditional and alternative investments, including overseas equity and bond funds, hedge funds and property.

According to Z-Ben Advisors, the UBS AM WFOE has 32 staff and registered capital of $30.5m.

Separately, UK quant asset manager Winton Capital also received greenlight from the Amac yesterday for its Winton Capital China Diversification Series 3  Private Securities Investment Fund, according to Amac records.

Winton Capital runs eight PFM products. In November last year, the firm received approval for the Winton Capital China Multi-Strategy No. 1 Private Securities Investment Fund.

The UK firm’s Shanghai WFOE has 11 staff and registered capital of $2m, according to Z-Ben Advisors.

In total, 78 onshore funds have been launched by foreign PFM licence holders, with total AUM of RMB 7.88bn ($1.11bn) as of the end of 20 March, according to a statement from Amac.

Several asset mangers have obtained the PFM qualification this year, including Income PartnersRussell InvestmentsSchroder Adveq and BEA Union Investment.

Part of the Bonhill Group.