UBS heads list of foreign managers in China

Invesco jumped two places from last year to rank number two, followed by JP Morgan Asset Management and Schroders in third and fourth position, respectively.

The leading six firms, which also include Blackrock and Fidelity, head the pack of 26 fund houses by some distance. (see table below)

European managers retained the largest slice of the top 25, with UK managers gaining the most ground since last year, according to the report by the Shanghai-based consultancy.

However, Hong Kong-based Value Partners moved several steps higher on the ladder compared with 2018, and there were five debut entrants this year.

These include Asia-Pacific-based First State and Mirae Asset, as well as three hedge fund managers: Winton, Bridgewater and Man.

The overall score is a composite of factors calculated by summing the equally weighted scores of three distinct categories: onshore, outbound and inbound businesses. How China-specific business risks and probabilities were approached by global managers was a key determinant of the latest rankings.

Invesco heads the list for onshore operations amid a flurry of activity within the wholly-foreign owned enterprise (WFOE) sector last year. JP Morgan is top for managing Chinese outbound money invested globally through the mutual recognition scheme and the bank’s qualified domestic institutional investor channel. Fidelity leads for (actively) managing overseas money inbound into China via Stock Connect and the Qualified Foreign Institutional Investor schemes, just ahead of passive fund provider Blackrock.

“While we maintain that optionality will be advantageous for global managers, 2018 saw groups climb the ranks by being selective and doubling down on their areas of strength,” said the report.

China’s fund management industry is set to grow to $9trn within the next four years from around $5trn, according to Z-Ben, so there are clearly tremendous opportunities for international fund managers, as long as the Chinese authorities continue to open up the market to foreign participants.

Last year, regulators allowed overseas firms to apply for 51% control of domestic fund management groups for the first time, but there have been no acquisitions yet.

“Simply porting a global operating standard into a China business will not work. Real adaptability will prove to be the single most important variable for generating lasting success,” said the report.

The top 25 foreign asset managers in China

Source: Z-Ben Advisors