UK asset manager Schroders has launched its second multi-asset private fund in China in response to demand for these products from local investors.
It’s the UK asset manager’s sixth onshore product since the company was given approval to set up a wholly-owned unit – officially called wholly foreign-owned enterprises (WFOEs) – in China two years ago, allowing it to sell private fund products to wealthy local investors.
Schroders says its survey of Chinese investors found that more than three-quarters indicated a preference for multi-asset products because of the unpredictability and volatility of financial markets.
The new fund – Schroders PFM China Multi Asset Income FOF No. 1 – has a “relatively conservative investment approach” compared to its first multi-asset fund launched in August, Schroders says in a statement on October 30.
According to the company, “offering multi-asset solutions that cater to different levels of risk appetite can give investors greater flexibility in their financial planning”.
David Guo, Schroders’s chief executive officer for China, says the company polled 1,169 Chinese investors this April and found that 77% preferred multi-asset funds.
“This is one of the ways we keep our finger on the pulse of what investors are thinking and be ready to offer the most relevant investment solutions at the most appropriate time,” he says in the statement.
A fund analyst at a Chinese firm in Shenzhen says multi-asset funds and fund of funds (FOFs) are becoming popular among foreign asset managers in the country.
“Many of the 30 WFOE funds launched this year are FOF structured. The advantage of this strategy is that managers have great flexibility to adjust their portfolios throughout different market cycles,” the analyst tells Asia Asset Management, speaking on condition of anonymity.
Beijing began granting WFOE licences to subsidiaries of foreign asset managers in Shanghai’s free-trade zone in 2016 as part of its plan to open up the onshore market.
Thus far, 22 foreign firms have been licensed and they have launched a total of 56 private funds.
Schroders had US$565.5 billion of assets under management as at June 30, 2019.