SHANGHAI/HONG KONG (Reuters) – Fidelity International said on Wednesday it raised 1.08 billion yuan ($156 million) for its first mutual fund product in China, the third-biggest launch of an equity fund since the start of 2022 in China’s challenging market environment.
But the fundraising underperforms many newly set-up balanced funds, which invest in both stocks and bonds, in China, and pales against maiden China fund launches by global rivals. Last month, Neuberger Berman raised 4 billion yuan in a bond fund in China. In 2021, BlackRock’s China unit raised 6.68 billion yuan in an equity fund. Fidelity International’s foray into China’s $3.7 trillion mutual fund market comes as investors remain concerned about sustainability of the country’s nascent economic recovery. China’s benchmark CSI300 Index has barely gained so far this year.
The successful launch of the fund “amidst the current macroeconomic environment and tentative investor sentiment” marks another important milestone for Fidelity International’s China business, Rajeev Mittal, Managing Director, Asia Pacific ex-Japan, said in a statement.
“Looking ahead, we have a strong product pipeline for 2023 and beyond, with a fixed income product due to launch in the coming months.”
Helen Huang, head of Fidelity International’s China mutual fund unit, said the asset manager has a long commitment to China, one of its most strategically important markets.
Peter Alexander, managing director of fund consultancy Z-Ben Advisors, said it’s important for a global asset managers to have “genuine long-term commitment” to China.
Another crucial factor is that the local team needs to operate with minimal interference from headquarters, Alexander said.
Fidelity’s Huang is “one of the best operators in the industry … But my question is: will she be given the necessary latitude and authority to do her job?”
Foreign assets managers face obstacles such as a lack of onshore track record and lengthy decision-making processes, said a business development executive at an onshore China fund who declined to be named because he’s not authorised to speak to media.
To succeed in China, global funds need to offer a differentiated investment strategy, provide decent returns, or capitalise on their international presence to facilitate global asset allocation for local investors, he said.
($1 = 6.9323 Chinese yuan renminbi)
(Reporting by Samuel Shen, Summer Zhen and Tom Westbrook; Editing by Muralikumar Anantharaman and Kenneth Maxwell)
