May 2020
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Fidelity International applies for China mutual fund licence

By Asia Asset Management  
May 22, 2020

US fund manager Fidelity International has applied for a licence to sell mutual funds in China, describing it as an “important milestone” for its investment strategy in the country.

The move comes after the China Securities Regulatory Commission announced last year that foreign fund managers will be allowed to sell mutual funds to individual investors in China via their wholly-owned units, known as wholly foreign-owned enterprises (WFOEs).

Some global managers, including BlackRock and Neuberger Berman, have already applied to the regulator for mutual fund licences.

Fidelity International, which applied for a licence for its unit, FIL Investment Management (Shanghai), describes it as a “major step in its full transition to a public asset management company in China”.

“The application for a mutual fund licence is an important milestone in our China strategy,” Daisy Ho, Fidelity International’s president for China, says in a statement on May 20.

The WFOE designation, which was introduced in 2016, originally allowed foreign asset managers to only offer investment advisory services through the units.

In 2017, they were allowed to launch private fund business by registering as private fund managers with the Asset Management Association of China.

According to Ray Chou, a partner at US management consulting firm Oliver Wyman, Beijing’s move to ease restrictions on WFOEs makes China’s mutual fund market more conducive for foreign managers.

“[The easing of regulatory control] further reinforces our perspectives on the strategic importance of China and a long-term view taken by foreign asset managers,” Mr. Chou tells Asia Asset Management.

Fidelity International had around US$479.9 billion of total assets as of March 2020.