New York-headquartered Van Eck has submitted an application with the China Securities Regulatory Commission (CSRC) last week to establish a public mutual fund company in the mainland, according to the regulator’s records.
When established, the firm will be able to tap China’s RMB 17.8trn ($2.68bn) retail mutual fund market.
The move follows almost one year after the firm was reported as having the intention to apply for the licence.
Three other foreign asset managers – Blackrock, Neuberger Berman and Fidelity – have also applied for the license. Only Blackrock has received a greenlight from the regulator while the other two are still waiting for regulatory approval.
Vanguard is also preparing for the application after it appointed Luo Dengpan as its general manager for the yet-to-be-established retail fund management company (FMC) in China in September, which is a significant step before a firm can apply for the license.
Plans in China
Van Eck, which manages around $61.2bn in ETF and mutual fund assets globally, intends to offer ETF products in the mainland, according to Richard Tang, Shanghai-based CEO for Greater China.
These ETFs may include thematic ETFs. “We listed e-sports ETFs in the US, Europe and Australia, and such themes could be brought to China,” Tang said.
Given that the firm manages multiple types of asset classes, including equities, fixed income, commodities and natural resources, it also intends to offer multi-asset allocation solutions, to help investors in the mainland diversify their portfolios.
Van Eck noted that this is not the first time that has invested in China’s domestic markets.
“Van Eck has been working in the Chinese capital markets since 1992,” added Jan Van Eck, the firm’s CEO.
“Our efforts have included a joint venture in the 1990s, educational efforts, internships and investments in Chinese securities over that time period,” he added.
In 1996, Van Eck established a Sino-US joint venture with Shanghai-based Shenyin Wanguo in Hong Kong, which was rebranded to Shenwan Hongyuan in 2015.
Van Eck also manages China-focused ETFs, including the New York-listed Van Eck Vectors China Growth Leaders, the Vectors ChinaAMC China Bond, and the Vectors ChinaAMC SME-ChiNext ETFs. China AMC acts as the subadvisor of the three products, this is from their websites.
Van Eck established an entity in Shanghai in 2013, which was converted into a wholly foreign-owned enterprise (WFOE) in 2018, according to the firm’s website. However, it does not hold a PFM or QDLP licence.
The firm is planning to apply for the licence, according to a person familiar with the matter.
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.
Meanwhile, the 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.
Elsewhere, the Van Eck has a presence in Australia, Germany, Netherlands and Switzerland.