The Well-Established FMC Players

China’s first FMCs opened for business in 1998 and by the end of 2020, 134 FMCs were active in the market.[1] These companies have total AUM of EUR 3.9 trillion[2], accounting for about 25.39% of the industry total. Some 14 FMCs have taken seats in the top 30, contributing 57.44% of the total AUM of all managers in the list.

With more than 20 years of development, FMCs are the most established manager category. Leading players have developed their brands and reputation in the market, and have achieved relatively stable market shares over recent years.

FMCs can manage both retail funds and institutional capital (through segregated accounts). Roughly 60% of their AUMs are in retail funds, while segregated accounts take up the rest, including pension fund mandates which account for 10% of the AUM (see figure 4). FMCs need a qualification to manage money for pension funds.

In the retail funds’ space, FMCs invest predominately in China itself. Overseas investments (through QDII funds[3]) account for less than 2% of net asset value[4]. In the domestic market investment, FMC offers equity funds[5], bond funds[6], hybrid funds[7]. (See figure 5).

In a world where passive investments have become increasingly dominant in recent times, China has been an important source of alpha in a variety of asset classes through active investments. According to Morningstar’s recent China Active/Passive Barometer, 85% of actively-managed Chinese equity funds outperformed passive equity funds over the last one to three years. Active management dominates Chinese FMCs’ investment strategies. While passive strategies are starting to gain ground, they currently only account for around 10% of the market (See figure 6).

FMCs have been working hard to developing their international reach, positioning themselves as China market experts for global investors. So far, 12 of the 14 FMCs in the Top 30 have established asset management subsidiaries in Hong Kong to conduct their global businesses; 8 of them have launched UCITS funds to attract European investors and to build their international brands (See figure 7).

[1] Source: CSRC.
[2] Source: AMAC.
[3] QDII funds invest overseas markets, QDII stands for Qualified Domestic Institutional Investors.
[4] Source: Wind.
[5] Equity funds are required to invest more than 80% of assets into equities.
[6] Bond funds are required to invest more than 80% of assets into bonds.
[7] Hybrid funds are funds not classified as equity funds or bond funds. In China, most of the hybrid funds invest more than 70% of their assets into equities.

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