Chinese fund managers get OK to market to individuals

FWR Staff

29 February 2008

A raft of fund managers secure approval from financial-service regulators. Seventeen Chinese fund managers have been given China Securities Regulatory Commission approval to offer wealth-management services that were previously offered only by commercial banks.

The fund managers are China Southern Fund Management, Harvest Fund Management, ICBC Credit Suisse Asset Management, E Fund Management, Zhonghai Fund Management, China Universal Asset Management, Penghua Fund Management, Guotai Asset Management, Lion Fund Management, Bank of Communications Schroder Fund Management, Hua An Fund Management, China Asset Management, CCB Principal Asset Management, Bosera Asset Management, Changsheng Fund Management, GF Fund Management and Yinhua Fund Management.

Fees

"The services will help the diversified development of fund companies," according to a communiqué from the Guotai Fund, which adds that "several clients have shown interest in wealth-management services."

Any Chinese fund manager with at least $28 million in net assets and at least $3 billion in assets under management can apply to provide wealth management services in China. These managers can then take on clients with at least $7 million in investable assets, which will include corporate investors rather than individuals.

Fund managers can invest in stocks, bonds, stock funds, bank bills, short-term debt, asset-backed securities, financial derivatives and other regulated products. In return, they can levy a fee of, at most, 20% of investment returns.

These high fees have "raised the interest of fund managers to offer these services, which are similar to private funds," Liao Bojun, an analyst at Changjiang Securities, told China's Xinhau news agency. "Fund management companies' wealth-management products are expected to mainly invest in stocks, while those of banks usually focus on low-risk investment tools, such as bonds and subscriptions ."

Boston Consulting Group predicts that China's wealth market will grow at a rate of 17.4% per year, far outpacing the global average of 5.6%.

There are 59 fund-management companies in China. -FWR

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