Fidelity International has received final approval from regulators in China to begin selling mutual funds in the world’s second-largest economy, joining other global investment firms that manage money directly for Chinese investors.
Fidelity subsidiary, FIL Fund Management (China) Co. Ltd., has received a license from the China Securities Regulatory Commission, allowing it to offer yuan-denominated investment products to retail clients, the company said in a statement on Friday.
China in 2010 By 2020, it has scrapped ownership restrictions on foreign financial institutions. The move was seen as a concession to Wall Street as part of the China trade deal signed by then-President Donald Trump. Previously, foreign investment banks, asset managers and card networks were barred from operating independently in the world’s most populous country.
“China is a strategic and long-term priority market for Fidelity International,” the company currently has more than 1,900 employees in the country and offices in three cities.
The Chinese Securities Regulatory Stamp is the final step in a long process that foreign companies must go through before they can sell and sell funds directly to domestic investors.
Fidelity submitted its application in May 2020 and received initial approval in August 2021. Chinese regulators typically have to conduct on-site inspections and approve the appointment of senior executives before giving the final go-ahead to launch the fund.
According to a CSRC statement in November 2021, during the application process, Chinese regulators requested information including details of the company’s products and mutual fund records for the past three years.
The government questioned whether Fidelity’s selection for the board of directors of a local mutual fund management company was adequate to fulfill their duties, as neither had experience working in the Chinese fund industry.
In April 2022, the company appointed Helen Huang as its China managing director. Ms Huang joins Huabao WP Fund Management, the state-owned steelmaker and Warburg Pincus.
It is the first foreign wealth manager to start selling mutual funds in China and has raised $1 billion in capital funds in September 2021, about a year and a half after filing.
China’s mutual fund industry has grown rapidly. According to data from Morningstar Direct, there were 155 managers and 26 trillion yuan under management as of the end of June, which is $3.7 trillion at current exchange rates. The industry is becoming more competitive, with managers cutting back on fees to investors and developing star managers to use unconventional marketing strategies such as direct sales and winning trades.
It can be difficult to find balance for new entrants. The top 10 asset managers – excluding money-market funds – account for 43% of the market share, Morningstar Direct data shows.
Beijing appears to have recently picked up the pace of licensing foreign financial firms. In November, both Neuberger Berman and Manulife Investment Management got the green light to sell mutual funds in China.
Neuberger became the second firm after BlackRock to get the nod to start a mutual fund business from scratch, while Manulife was allowed to take full control of a domestic joint venture that had been in the works for years. Insurer Chubb Ltd
In November, he received a separate license to control the Chinese joint venture.
Fidelity International spun off Boston-based Fidelity Investments in 1980. The London-based firm now manages more than $600 billion for clients in Asia Pacific, Europe, the Middle East, South America and Canada, according to its website.
Write to Jing Yang at [email protected]
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