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US firm receives onshore qualification

William O’Neil will be competing against other foreign quant players that have launched products in China.
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The firm’s Shanghai-based wholly foreign-owned enterprise (WFOE), William O’Neil Investment Management, has received a private fund management (PFM) licence in China, according to records from the Asset Management Association of China.

Having a PFM licence enables foreign entities to develop and sell funds investing in onshore assets to domestic qualified investors, which include the high net worth and institutional segments.

FSA sought more information from the Los Angeles-based firm, but it was not able to provide more details in time for publication.

William O’Neil & Co is an independent advisory firm that provides buy and sell recommendations and independent research to institutions, according to the firm’s website. It makes use of the “O’Neil methodology” (OM), founded by William O’Neil in the 1960s, which combines fundamental, quantitative and technical analysis to identify stocks that are poised to outperform.

The firm intends to launch quantitative products in China, according to a previous local media report from China Fund News.

It said that in November, Steven Birch, the firm’s president, spoke at an event organised by Oriental Securities and indicated that the firm is exploring ways of developing quantitative funds in China by incorporating its experience in the US.

According to the firm’s website, it already has a China A-shares focus list, which is a curated list of stocks chosen by its analyst team using the OM.

Besides its WFOE, the firm has another affiliate in Shanghai, a research and information technology company that develops investment research terminals and mobile apps for Chinese equity investors, according to the firm’s website.

Quant competition

If the firm were to push through its plans of launching quant funds in China, it will be competing against other foreign PFM players that focus on quant strategies.

They include New York-based quant manager Two Sigma, which recently received approval to launch its China Juliang Macro Strategy No 1 Private Securities Investment Fund.

Another quant manager, UK-based Winton Capital, is also active in the mainland. So far, the firm has launched at least seven products and has the largest onshore AUM among all the foreign PFM licence holders in China, according to a recent Cerulli Associates report. So far, it has been the only manager that has exceeded the RMB 2bn ($280m) AUM mark.

Other quant firms with PFM licences are DE Shaw and Man Investments.

In total, there are 26 foreign PFM licence holders which together have launched 78 onshore funds, with total AUM of RMB 7.88bn as of the end of March, according to data from Amac.

Part of Mark Allen.