The meager haul — amounting to 0.2% of hedge fund assets in China — reflects a host of challenges. International names like BlackRock don’t resonate much in China’s crowded market of close to 9,000 hedge funds, which has its own set of local stars. The limited name recognition is compounded by distribution hurdles. It all suggests a long wait before China turns into a meaningful source of profit for international money managers, which are desperate for new avenues of growth as clients in developed markets shift toward low-fee investments.
“Building a brand in China is definitely a challenge for some foreign players,” said Hersh Gandhi, Man Group’s managing director for Asia Pacific ex-Japan. “We’ve been thoughtful about the strategies we want to run and the market segments we want to be in, and have sized our operations accordingly. Man Group declined to comment on its assets and profitability in China. It, UBS and BlackRock oversee between 100 million yuan to 1 billion yuan each, according to ranges from PaiPaiWang, which tracks hedge funds in the country.
has the biggest share of onshore money — roughly 2.5 billion yuan — after spending several years building an advisory business in China before receiving its private fund management approval in 2018. Excluding Winton puts the average for the rest at about 170 million yuan, 36% below the local mean, according to data from the Asset Management Association of China and Bloomberg calculations. Nine manage less than 100 million yuan, including Fullerton Fund Management Co. and Invesco, which both won licenses more than two years ago.
Three, which have yet to launch a product or did so only recently, aren’t included in the calculation. Invesco declined to comment on investment flows, saying in an e-mailed statement that the company is “committed” to its mainland China business. Fullerton didn’t immediately reply to a request for comment.
— boasts a 515% cumulative return , according to PaiPaiWang. The top 10 performers among the largest local players had an average return of 37% in the first 10 months of 2019. While comparable data for foreign funds isn’t available, BlackRock’s first product returned about 10.3% as of Nov. That compares to an 8.6% decline in the Shanghai Composite Index during the period.
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