Financial Liberalization Drives Growth at China’s Asset Managers
Financial liberalization is starting to pay off for China’s fund managers. Regulatory reforms launched by the authorities after the 2008 financial crisis have encouraged state-run companies to issue bonds and increase annuity investments for their pension funds. These moves have created strong demand for fixed-income funds, industry executives say.
At the same time, regulators have allowed the country’s 85 registered asset management firms to introduce a range of new products tailored to China’s retail investors. These include low-risk investments such as index funds and short-term money-market-type funds promising annual yields of 4 to 6 percent; they compete with wealth management products offered by banks.
These initiatives have turned the trickle of funds flowing into the industry in recent years into a torrent. Assets of the China 20, Institutional Investor’s exclusive ranking of the mainland’s largest fund management firms, surged by 24.8 percent, or $78.1 billion, in the 12 months ended March 31, to a total of $393 billion. That growth represented a dramatic change from the previous year, when assets grew by just 2.9 percent.
For fund managers bigger is apparently better. Nearly half of the asset growth went to the top three firms on the China 20: China Asset Management Co., Harvest Fund Management Co. and E Fund Management Co. China AMC increased its assets under management by 35.9 percent, to $55.5 billion; Harvest posted a 39.1 percent jump, to $50.5 billion; and E Fund reported a 25.5 percent rise, to $37.5 billion.
How We Compiled the Ranking
Institutional Investor’s ninth annual ranking identifies China’s top 20 fund managers by assets. New York–based Senior Editor Jane B. Kenney, with the assistance of Researcher Serina To in Hong Kong, compiled the ranking from a variety of sources, including questionnaires filled out by the institutions themselves. II refined this data through follow-up emails and telephone calls. When official data were unavailable, II obtained figures from websites and other public sources. Figures for 2013 and 2012 are as of March 31; where necessary, values were converted from yuan to dollars using exchange rates on those dates.