Fidelity International has been granted approval by the China Securities Regulatory Commission (CSRC) to set up a wholly-owned mutual fund unit in Shanghai, becoming the second foreign provider – after Blackrock announced its approval in June – to be granted access to China’s $3 trillion retail fund market.
Fidelity had submitted the application to the CSRC in May 2020. At the time, Fidelity International’s China head, Daisy Ho, had commented: “The application for a mutual fund license is an important milestone in our China strategy.”
Fidelity’s application came shortly after China moved to scrap foreign ownership limits in its mutual fund and securities sectors in April 2020, paving the way for foreign firms to take full ownership of or set up wholly owned local mutual fund providers.
Apart from Blackrock and Fidelity, several other global asset managers, including Neuberger Berman and Schroders, have also applied to set up wholly owned mutual fund businesses in the country. Meanwhile, the likes of J.P. Morgan Asset Management and Morgan Stanley, who had previously set up joint venture mutual fund firms in China with local partners, have sought to increase their stakes in or take full ownership of those JVs.
While China’s mutual fund market has strong growth prospects as it closes the gap with the $21 trillion US mutual fund market, it is also highly competitive, with about 150 companies already serving it. Vanguard made headlines in March this year by dropping its plans to obtain a China mutual fund license, claiming the market was too “crowded.”
Vanguard does have a retail presence in China, however, through a robo-adviser joint venture with China’s Ant Group. The platform passed the 1 million user milestone in March this year.
