China Southern Asset Management (CSAM) and China Asset Management Co. (China AMC), the fifth and sixth largest asset managers in the Mainland, confirm they have been approved by Beijing to offer target pension products as the country moves to liberalise its private pension market.
Chinese financial website hexun.com was the first to report that the two companies are among 14 domestic asset managers that were licensed this week to manage target pension products.
The August 7 report also names Harvest Fund Management, E Fund Management, Bosera Asset Management, and Fullgoal Fund Management, among the licencees. Representatives for these companies did not immediately respond to requests for comment from Asia Asset Management (AAM).
Beijing stepped up reform of the country’s voluntary private pension products – the so-called third pillar of the pension system – in 2016 by permitting the launch of fund of funds (FOFs).
In guidelines issued to domestic asset managers this March, the China Securities Regulatory Commission (CSRC) said FOFs can be structured as target-date funds (TDFs) and target-risk funds (TRFs).
These funds, which are aimed at retirement planning, offer a mix of stocks and bond. The portfolio composition rebalances over time based on the age and risk tolerance of investors.
A China AMC spokeswoman, who confirms that the company has been granted a licence to manage such products, says its FOFs has been registered as a TDF.
“We’re still doing the preparatory tasks. We’ll announce the timetable for the fund launch later,” she tells AAM. The company has also submitted applications for three other FOFs to the CSRC, she says.
“Overall, we believe developing target pension products will help address the country’s ageing population problem,” she says, adding that local fund managers have “significant product experience and investment expertise in place to meet the pension market demand”.
CSAM’s FOFs has also received regulatory approval, Chen Si, a spokeswoman for the company, tells AAM.
“The FOFs is designed to include the sub-funds with stable track records so as to provide better risk control for our clients,” she says.
But the fact that participation in the third pillar pension market is voluntary means it remains to be seen how much demand these products can generate, according to Michael Wu, country executive for Greater China at Northern Trust.
“This is a continuation of the pension market reform to make additional products available for retirement investment,” Mr. Wu tells AAM.
CSAM and China AMC had total assets under management of 471.5 billion RMB (US$69.3 billion) and 427.3 billion RMB, respectively, at the end of March, according to Mainland fund advisory firm Z-Ben Advisors.
