Although named “wealth management companies”, businesses in this new category are set up and regulated as asset managers. With a very broad investment scope covering both the public and private market, BWMCs can serve both retail and qualified investors with different product offerings.
Banks have long been regarded as the most important distribution channel for investment products in China. BWMCs are well-positioned to leverage the distribution network of their parent bank, which is a valuable competitive advantage over other types of asset managers.
However, there are also some serious challenges for this new category, including firms’ lack of equity investment experience. According to China Wealth (Asset) Management Registry and Custody Co., Ltd., at 2020 year-end, 92.26% of existing investment products managed by BWMCs were fixed-income vehicles. As figure 11 shows, direct equity exposure accounted for just 2.31% of total assets.