Fine tuning to maximise potential
By Hui Ching-hoo
China Universal Asset Management (China Universal) has made its mark as one of the fastest growing asset management companies in China since its inception in 2004. The Shanghai-based firm is looking to enhance its product lineup and investment capabilities to capitalise on the opening up of the mainland financial market.
Over the past nine years, China Universal has successfully transformed from being a local fund house with an international strategic position, to being a mainland asset management behemoth with strong overseas exposure. Currently, the company has total AUM of around 150 billion RMB (US$25 billion) as of September 30 2013. Its client base amounts to over 4 million individuals nationwide.
Andy Lin, the firm’s Chief Executive Officer, tells Asia Asset Management, that he is much encouraged by its achievements. The company will step up its expansion so as to take advantage of the opportunities engendered by the mainland economic development.
“China is on the cusp of an economic transformation. So China Universal will have to fine tune its business strategies and better equip itself in order to effectively adapt to the country’s ongoing economic evolution.”
In spite of the upward spiral in AUM, Mr. Lin states that the firm has never projected any hard target for AUM or profit growth: “Money comes and goes. What matters is how much money you can make for the clients.”
Pointing to its core competitive strategies, Mr. Lin aims for China Universal to achieve the status of being the top asset manager in China, meaning being capable of delivering consistent long-term returns to its clients as a result of the calibre of its investment team, effective investment processes, and risk control, in tandem with becoming the country’s bellwether in terms of product innovation.
China Universal has made noteworthy progress in this regard over the past few years. For example, it pioneered the first exchange traded T+0 Money Market Fund, and the first credit card “cash pot”. The company is also in the vanguard in using its online platform for fund distribution. It has also proven itself the first mover in launching fund products tracking medical sectors and privately-owned enterprises.
As to product strategies, China Universal currently has 39 mutual fund products featuring a wide array of investment themes including an equities fund, index fund, QDII fund, balanced fund, bond fund, plus money market fund.
Although the product lineup offers comprehensive coverage to its clients with various risk exposures and investment appetites, Mr. Lin confides that China Universal will now move decisively to diversify its product mix. This product differentiation will depend on market demand and its internal expertise.
“China Universal has real strength in stock-picking capability and credit analysis, so we will put our emphasis on active equities funds and active bond funds.” He cites China Universal’s Advantage Selective Mixed Fund as an example noting the selective mixed fund has delivered a remarkable annualised return of over 24.16% through volatile market conditions.
“We will also focus on passive products. Since the operation of index products is different from our active products model, we are considering spinning off the index fund products with a new sub-brand name.”
Mr. Lin points out that China Universal’s businesses currently encompass five areas including mutual funds, pension products, segregated accounts, overseas services, and asset management. All the segments have made notable headway in market penetration. For example, its mutual funds have gained critical mass to around 100 billion RMB in AUM. The company’s Hong Kong-based affiliate, China Universal Asset Management (HK), has rolled out three fund products including the recently-launched C-Shares CSI 300 Index ETF. China Universal also set up a new asset management vehicle, China Universal Capital, specialised in real estate projects this past March.
With the recent establishment of the Shanghai free-trade zone Mr. Lin sees a market liberalisation opportunity tailor made to enable strengthening its RQFII and QDII businesses. Using pilot schemes, the company will play an intermediary role in introducing Chinese investment opportunities to overseas investors and vice versa.
He adds that social responsibility is another significant core value the company focussed on: “China Universal has set up a charity foundation which finances the constructions of schools in poverty-stricken rural areas. In addition, our medical funds invest in those health care sectors that help to improve the quality of life as well as longevity of the country’s ageing population.”