China’s Social Security Fund (SSF), the country’s supplementary pension fund with total AUM of 2.04 trillion RMB (US$298.6 billion), is reportedly seeking additional fund managers to oversee its domestic investments.
Mainland business daily Securities Times cites unidentified market sources as saying that the National Council for Social Security Fund (NSSF), the supervisory body of the SSF, has been in talks with a number of fund managers about the manager selection.
It will reportedly be carried out as early as the end of June, although the NSSF has not disclosed how many fund managers it will hire, according to the report.
The NSSF did not respond to a request for comment from Asia Asset Management (AAM).
Zheng Bingwen, director of the centre for international social security studies at the Chinese Academy of Social Sciences, says it is expected that the NSSF will boost the fund manager line-up to handle the fund’s fast-growing AUM.
“I don’t find the move unexpected as the NSSF has not recruited any new managers since 2010,” Mr. Zheng tells AAM.
“Given that the existing 18 fund managers for the SSF are conventional fund houses and asset management subsidiaries of local securities houses, the NSSF might consider selecting fund managers from the insurance asset management side,” he says.
The NSSF first outsourced management of its domestic investments to six fund managers, including China Asset Management Co, Harvest Fund Management and Bosera Asset Management, in 2002. It added three more fund managers in 2004, and nine in 2010.
According to Miao Hui, a senior analyst at Cerulli Associates Asia, the NSSF’s last request for proposal (RFP) for fund managers was in 2010, when the SSF’s total AUM was 856.7 billion RMB.
The assets swelled to surpass 2 trillion RMB at the end of 2016, with 54% under outsourced management, up from 41.9% in 2010, Ms. Hui tells AAM.
She notes that China’s asset management industry has developed fast over this time, and more managers are showing outstanding growth and performance.
“In comparison, the return of the SSF is relatively weak, though the oscillating market matters. As such, it’s reasonable for NSSF to conduct a new round of RFP this year,” Ms. Hui says.
The SSF’s investment return declined sharply to 1.73% in 2016, from 15.19% in 2015.
Chen Xiangjing, deputy director-general of the NSSF’s equity investment department, had previously outlined the criteria for fund manager selection. It includes factors such as risk control capability, long-term investment track records, and research capability as the benchmark.
