PRODUCT DETAILS

Included with Purchase Asset Management in 2020 y Digital report in PDF format y Key findings y Unlimited online firm-wide access y Analyst support Rolling Out the Red Carpet y Exhibits in Excel y Interactive Report Dashboards

OVERVIEW & METHODOLOGY Interactive Report This annual report builds on the firm’s ongoing research coverage of fund management Dashboards industries throughout the Asia-Pacific region. As one of the biggest and most dynamic asset Interact and explore select management markets in the region, China continues to attract much interest from fund report data with Cerulli’s managers, particularly given various market liberalization measures. visualization tool. Coverage includes an overview of key asset management trends in China, including discussions on new distribution initiatives and fund sales amid the COVID-19 pandemic, fund managers’ profitability and product innovation, the evolving competitive landscape, and opportunities for foreign asset managers along with recent market liberalization. The report y Chinese Market Overview: Analyze five years of also discusses key industry themes surrounding the investment advisory business and Chinese mutual fund and exchange-traded fund data, including assets institutions, as well as fund managers’ global expansion. This report also details China’s retail under management and net new flows. Additionally, review the business, competitive products, institutional business, retirement, and cross-border schemes. distribution landscape with interactive charts that break out mutual fund data by distribution channel and investor type, and understand asset managers’ plans for expanding into distribution USE THIS REPORT TO channels and fund strategies to be promoted to distributors. y Identify strategic opportunities with an overview of key asset management trends across y Chinese Institutional Market Overview: Explore a detailed China analysis on historical institutional investable assets and projected y Analyze the developments in China’s investment advisory space and pinpoint opportunities institutional addressable assets, with additional filters by for fund managers retirement and life insurance assets. y Review state-owned investment funds and homegrown fund management companies’ y Chinese Financial Products Landscape: Compare the product overseas investment and international expansion activities landscape between the retail and institutional markets in China, including sizing, historical performance, and number of products y Review detailed sizing and key developments within the retail and institutional markets launched, with filters by product type. y Gain insight into the possibilities for growth as various liberalization measures boost the presence of foreign players in China

QUESTIONS ANSWERED y What recent key trends in China should asset managers take note of? y How has the competitive landscape for fund management companies evolved? y How have global managers responded so far to the lifting of foreign investment limits on various financial institutions conducting asset management business? y What is the impact of the COVID-19 pandemic on China’s mutual fund industry? y What are the investment advisory opportunities for foreign managers?

Cerulli Associates | [email protected] | www.cerulli.com Chapter 7 Retirement

Exhibit 7.09 Asset Managers’ Views on Distribution Channels They Intend to Expand the Use of to Promote Retirement Strategies Over the Next Three Years, 2020 Source: Cerulli Associates

Retail investors aged 21 to 60 Retail investors aged 61 and above

6.7 Domestic and global banks 6.8

Online platforms (including robo-advisors) 6.1 4.4 Securities companies 4.0 3.5 Insurance companies (including mutual 3.9 funds and investment-linked products) 4.3 3.9 Private banks 4.3

Direct sales 3.6 2.9 Independent financial advisors 2.4 2.9

1 234567 Least likely Most likely

• Cerulli’s survey found that asset managers’ distribution plans for retirement products are similar to those for general mutual funds. Regardless of investors’ age group, domestic and global banks are the most important channels for such products. Following that, those aged 21 to 60 are seen to rely on online platforms (including robo-advisors) to gain access to retirement strategies, while those aged 61 and above are seen to place almost equal importance on platforms, insurers, and private banks.

Key Implication: Cerulli believes that the introduction of the pilot investment advisory scheme since October 2019 (see Chapter 2: Investment Advisory and Chapter 4: Retail Business) will help spur China’s third-pillar pension growth. For example, China Wealth Management, a subsidiary of ChinaAMC, received the investment advisory qualification in 2019 and has rolled out four retirement portfolios based on investors’ age groups, according to the TDF lifecycle.

124 The Cerulli Report | Asset Management in China 2020 Table of Contents

Table of Contents: Expanded

Key Questions Answered ...... 18 1. How has the competitive landscape for fund management companies (FMCs) evolved? ...... 18 2. How have global managers responded so far to the lifting of foreign investment limits on FMCs? ...... 19 3. What is the impact of the COVID-19 pandemic on China’s mutual fund industry? ...... 20 4. What are the opportunities for foreign managers under the investment advisory scheme? ...... 21 Exchange Rates ...... 22

Chapter 1: Overview of Key Asset Management Trends in China ...... 23 Exhibit 1.01. Snapshot of China’s Asset Management Industry, 2015–1Q 2020 ...... 24 Key Trend 1: New distribution initiatives and fast-track fund approvals boost retail sales ...... 24 Exhibit 1.02. Selected Distributors’ Mutual Fund Sales Volume, 2015–2019 ...... 25 Exhibit 1.03. Initial Public Offering Volume in 1H 2019 and 1H 2020 ...... 26 Key Trend 2: Managers in the black, with continued product innovation ...... 27 Exhibit 1.04. Fundraising Results by Investment Category, 1H 2019 and 1H 2020 ...... 28 Exhibit 1.05. Net Profits of Largest 20 Mutual Fund Managers by in China, 2018–2019 ...... 29 Key Trend 3: Competition heats up with proliferation of products ...... 30 Exhibit 1.06. Snapshot of Regulations of Innovative Products, 2020 ...... 31 Exhibit 1.07. Banks With Approved Wealth Management Subsidiaries in China, August 2020 ...... 33 Exhibit 1.08. Insurance Asset Management Products Registered With the Insurance Asset Management Association of China, 2015–May 2020 YTD ...... 34 Exhibit 1.09. Securities Companies’ Converted Pooled Asset Management Plan Products, June 2020 ...... 35 Key Trend 4: Market liberalization offers foreign players more opportunities to penetrate China ...... 36 Exhibit 1.10. Strategies Available to Foreign Players ...... 37 Exhibit 1.11. Strategic Partnerships Involving Foreign Institutions, March 2018–August 2020 ...... 39 Exhibit 1.12. Product Partnerships Involving Foreign Asset Managers, May 2016–August 2020 ...... 40 Exhibit 1.13. Foreign Asset Managers Registered as Private Securities Fund Managers in China, July 2020 ...... 41

8 The Cerulli Report | Asset Management in China 2020 Table of Contents

Chapter 2: Investment Advisory Sector: A New Window Opens ...... 43

Onshore advisory services for private asset management products ...... 43 Exhibit 2.01. Wholly Foreign Owned Enterprise Private Securities Fund Managers with Investment Advisory Qualifications, July 2020 ...... 43 Exhibit 2.02. Investment Advisory Management Products Launched by Managers with Investment Advisory Qualifications, July 2020 ...... 44 Pilot investment advisory scheme for public funds ...... 45 Exhibit 2.03. Snapshot of the Pilot Public Fund Investment Advisory Scheme ...... 46 Exhibit 2.04. Asset Managers with Investment Advisory Licenses and Their Fees, July 2020 ...... 47 Exhibit 2.05. Pilot Investment Advisory Business Licensees, October 2019–July 2020 ...... 47 Exhibit 2.06. Snapshot of Vanguard and Ant Financial’s Investment Advisory Joint Venture ...... 48 Exhibit 2.07. China’s Estimated Robo-Advisory Assets Under Management, 2018–2022E ...... 49 Exhibit 2.08. Selected Product Offerings of Fund Management Companies in the Pilot Investment Advisory Scheme, July 2020 . . .50 fund managers subadvising through Stock Connect ...... 51 Exhibit 2.09. Hong Kong Asset Managers Allowed to Provide Investment Advisory Services to Chinese Funds Investing in Hong Kong Equities Through Stock Connect, July 2020 ...... 51 Prospects for advisory services ...... 53

Chapter 3: Institutions and Fund Managers Go Global ...... 54

CIC ...... 54 Exhibit 3.01. China Investment Corporation’s Global Portfolio, 2014–2018 ...... 55 Exhibit 3.02. China Investment Corporation’s Global Portfolio by Investment Objective, 2014–2018 ...... 55 NSSF ...... 56 Exhibit 3.03. National Council for Social Security Fund Investments, 2014–2018 ...... 57 Exhibit 3.04. List of Fund Managers and Bank Custodians With NSSF Mandates, August 2020 ...... 58 SAFE ...... 60 Chinese fund managers ...... 60 Exhibit 3.05. List of Fund Management Companies’ Overseas Subsidiaries, 2020 ...... 61 A launchpad for further expansion ...... 63 Exhibit 3.06. Top 5 Fund Management Companies’ Hong Kong Subsidiaries by Assets Under Management, 2017–2019 ...... 63

The Cerulli Report | Asset Management in China 2020 9 Table of Contents

Chapter 4: Retail Business ...... 64

Fund Management Company Ownership ...... 64 Distribution and Advisory ...... 64 Exhibit 4.01. Mutual Fund and Exchange-Traded Fund Assets Under Management, 2015–March 2020 ...... 65 Exhibit 4.02. Mutual Fund Assets Under Management by Investor Type, 2017–2019 ...... 66 Exhibit 4.03. Open-End Mutual Fund Assets Under Management by Investment Objective, 2015–March 2020 ...... 67 Exhibit 4.04. Exchange-Traded Fund Assets Under Management by Asset Class, 2018–March 2020 ...... 68 Exhibit 4.05. Open-End Mutual Fund Net New Flows by Investment Objective, 2015–March 2020 YTD ...... 69 Exhibit 4.06. Largest 20 Mutual Fund Managers in China, 2018–2019 ...... 70 Exhibit 4.07. Fully Operational Joint Venture Assets Under Management, 2018–2019 ...... 72 Exhibit 4.08. Largest 10 ETF Managers by Assets Under Management, 2019–March 2020 (RMB billions) ...... 76 Exhibit 4.09. Fundraising Results of New Funds Launched by Investment Category, 2018–1Q 2020 ...... 77 Exhibit 4.10. Asset Managers’ Plans for Fund Strategies to be Promoted to Distributors Over the Next Two Years, 2020 ...... 79 Exhibit 4.11. Mutual Fund Fees and Distribution Charges, 2019 ...... 80 Exhibit 4.12. Mutual Fund Assets Under Management by Distribution Channel, 2017–2019 ...... 81 Exhibit 4.13. Asset Managers’ Views on Distribution Channels They Intend to Expand the Use of Over the Next Three Years, 2020 . 82 Exhibit 4.14. Asset Managers’ Methods of Incorporating ESG Principles into Their Investment Processes, 2020 ...... 83

Chapter 5: Competing Products ...... 84

Banks’ Wealth Management Subsidiaries ...... 84 Securities Firms ...... 84 Exhibit 5.01. Breakdown of Assets Under Management by Sector, 2018–1Q 2020 ...... 85 Exhibit 5.02. Performance of Banks’ Wealth Management Products, June 2019–June 2020 ...... 88 Exhibit 5.03. Investment-Linked Products’ Assets Under Management by Asset Class, 2012–2019 ...... 90 Exhibit 5.04. Growth of Online Peer-to-Peer Products, January 2019–December 2019 ...... 91 Exhibit 5.05. Securities Firms’ Assets Under Management by Plan Type, 1Q 2018–1Q 2020 ...... 92 Exhibit 5.06. Asset Management Products Launched by Futures Companies, 1Q 2017–1Q 2020 ...... 94 Exhibit 5.07. Registered Private Funds in China, 1Q 2017–1Q 2020 ...... 95 Exhibit 5.08. Trust Assets Under Management and Asset Breakdown, 1Q 2018–1Q 2020 ...... 97

10 The Cerulli Report | Asset Management in China 2020 Table of Contents

Chapter 6: Institutional Business ...... 99

Discretionary Assets ...... 99 Insurance ...... 99 Exhibit 6.01. Institutional Investable Assets, 2015–2019 ...... 100 Exhibit 6.02. Institutional Addressable Assets, 2019E–2024E ...... 101 Exhibit 6.03. Discretionary Assets Breakdown, 2015–1Q 2020 ...... 102 Exhibit 6.04. Discretionary Assets by Fund Management Company and FMC Subsidiary, 1Q 2020 ...... 103 Exhibit 6.05. Life Insurance Total Premiums, 2015–2019 ...... 105 Exhibit 6.06. Chinese Life Insurance Total Assets, 2015–June 2020 ...... 107 Exhibit 6.07. Largest 10 Life Insurance Companies by General Account Premiums, 2018–2019 ...... 109 Exhibit 6.08. Total Foreign Investments, 2015–1Q 2020 ...... 110 Exhibit 6.09. CIC’s Global Investment Portfolio, 2014–2018 ...... 111

Chapter 7: Retirement ...... 112

First and Second Pillars ...... 112 Third Pillar ...... 112 Exhibit 7.01. Overview of China’s Pension System, 2020 ...... 113 Exhibit 7.02. National Social Security Fund Assets by Management Type and Annual Return, 2014–2018 ...... 115 Exhibit 7.03. Enterprise Annuity Licensees, 2018–1Q 2020 ...... 117 Exhibit 7.04. Top 10 Pension Target Fund Managers by Assets Under Management, 2018–1Q 2020 ...... 119 Exhibit 7.05. Top 10 Pension Target Funds in China by Assets Under Management, 2019–March 2020 ...... 120 Exhibit 7.06. Individual Investors’ Main Sources of Retirement Funds, 2019 ...... 121 Exhibit 7.07. Asset Managers’ Views on Key Challenges in Building Retail Interest in Retirement Products, 2020 ...... 122 Exhibit 7.08. Asset Managers’ Views on Retirement Products of Interest to Retail Investors, 2020 ...... 123 Exhibit 7.09. Asset Managers’ Views on Distribution Channels They Intend to Expand the Use of to Promote Retirement Strategies Over the Next Three Years, 2020 ...... 124 Exhibit 7.10. Asset Managers’ Views on Plans to Implement Key Retirement-Focused Digitalization Initiatives, 2020 ...... 125

The Cerulli Report | Asset Management in China 2020 11 Table of Contents

Chapter 8: Cross-Border Schemes ...... 126

QFII/RQFII ...... 126 Greater Bay Wealth Management Connect ...... 126 Exhibit 8.01. Channels for Accessing Onshore Investments in China, 2020 ...... 127 Exhibit 8.02. QFII Quota Awarded, 2004–May 2020 YTD ...... 129 Exhibit 8.03. QFII Quota by Institution Type and Region, December 2017–May 2020 ...... 130 Exhibit 8.04. RQFII Investment Quota by Geography and Number of License Holders, May 2020 ...... 132 Exhibit 8.05. Comparison of Outbound Schemes Across Selected Cities ...... 134 Exhibit 8.06. -Hong Kong Stock Connect Trade Flows, June 2019–June 2020 ...... 136 Exhibit 8.07. -Hong Kong Stock Connect Trade Flows, June 2019–June 2020 ...... 138 Exhibit 8.08. Mutual Recognition of Funds Net Capital Flows (Quarterly), January 2017–June 2020 ...... 140 Exhibit 8.09. Total QDII Quota Awarded by Year, 2006–June 2020 YTD ...... 141 Exhibit 8.10. Foreign Holdings of China Onshore Bonds, June 2019–June 2020 ...... 142

Appendix ...... 143 Exhibit A.01. Chinese Mutual Fund Management Company Open-End Product Application Status, June 2020 ...... 143 Exhibit A.02. Public Fund Management Companies’ Application Procedures for Establishment, 2020 ...... 144 Exhibit A.03. Snapshot of the Private Fund Industry, 2015–June 2020 ...... 144 Exhibit A.04. Number of Private Fund Managers by Company Type, June 2020 ...... 145 Exhibit A.05. Top 10 Life Insurers by Investment-Linked Product Assets, 2018–2019 ...... 146 Exhibit A.06. Private Fund Manager Registration Application Procedures, 2020 ...... 146 Exhibit A.07. China Investment Corporation’s Foreign Acquisition Activity, 2007–July 2020 ...... 147 Exhibit A.08. List of Insurance Companies Obtaining Approval for Overseas Investment, 2013–July 2020 ...... 149 Exhibit A.09. Mainland-Hong Kong Mutual Recognition of Funds: Northbound Fund Application Status, July 2020 ...... 150 Exhibit A.10. Hong Kong-China Mutual Recognition of Funds: Approved List of Southbound Funds, July 2019 ...... 152 Exhibit A.11. Exchange-Traded Fund Net New Flows, 2015–March 2020 ...... 154 Exhibit A.12. Insurance Asset Management Company Product Assets Under Management by Asset Class, 2019 ...... 155 Exhibit A.13. Approved Qualified Domestic Insurance Companies in China, June 2020 ...... 156 Exhibit A.14. List of Insurance Asset Management Companies, July 2020 ...... 157 Exhibit A.15. Largest 10 Life Insurance Companies by Total Assets, 2018–2019 ...... 158 Exhibit A.16. List of Domestic Managers Managing Pension Assets, 2020 ...... 159 Exhibit A.17. Basic Pension Services’ Benefits and Contributions, 2015–2019 ...... 160 Exhibit A.18. Types of Individual Tax-Deferred Commercial Pension Insurance Products, 2020 ...... 161 Exhibit A.19. List of QDLP (Shanghai) Quota Holders, July 2020 ...... 162

12 The Cerulli Report | Asset Management in China 2020 Report Overview

Glossary ...... 163

Company Index ...... 167

The Cerulli Report | Asset Management in China 2020 13 Index of Companies

Company Index

Aberdeen...... 38, 107, 118 Aegon...... 120 Aegon-Industrial...... 83 AIA...... 38 AIM...... 45, 104 Alipay...... 25, 45, 82 Allianz...... 38, 109 ...... 38, 57, 84, 135 Ant Financial...... 25, 45, 48, 137, 9 ...... 38, 75, 87 Bank of China (Hong Kong)...... 17 Barclays...... 130 Barclays Bank...... 130 BlackRock...... 38, 45, 65, 75, 84, 107, 19 Blackstone...... 107 Bloomberg...... 56, 111 BNP...... 56, 107, 111 BNP Paribas...... 56, 107, 111 BNP Paribas Asset Management...... 107 BOC...... 104 Bosera Asset Management...... 62, 83 Bridgewater Associates...... 135 Capital Corporation...... 129 CBRE...... 107 CCB Principal...... 89 Chase...... 129 China Asset Management...... 49, 60, 89, 119, 140, 6 China Asset Management (Hong Kong)...... 140 China International Fund Management...... 38, 65, 75, 19 China Investment Corporation (CIC)...... 54 China Life...... 107, 109

The Cerulli Report | Asset Management in China 2020 167 Index of Companies

China Southern...... 48, 62 CIC Capital...... 56 CIGNA...... 38, 87 CITIC Securities...... 36, 62, 84, 92 Commonwealth...... 38, 87 Commonwealth Bank of Australia...... 38, 87 ...... 27 Credit Suisse Asset Management...... 27 CSOP Asset Management...... 62 Da Cheng Fund Management...... 89 December...... 25, 30, 77, 82-84, 88, 92, 94, 95, 10, 12 Deutsche...... 63 Deutsche Bank...... 63 E Fund...... 27, 62, 71, 76, 89 E Fund Management...... 27, 62, 71, 76, 89 Fidelity...... 38, 60, 65, 75, 95, 119, 19 Franklin Templeton...... 135 Fullerton Fund Management...... 135 Fullgoal...... 71 Fullgoal Fund Management...... 71 Funde Sino Life...... 109 GF Fund...... 27 GF Fund Management...... 27 Global Asset Management...... 44, 60, 133, 142, 2, 21 Goldman...... 38, 84, 107 Goldman Sachs...... 38, 84, 107 Goldman Sachs Asset Management...... 38, 84, 107 Hang Seng Investment Management...... 140 Harvest Fund...... 63 ICBC...... 27 ICBC Credit Suisse Asset Management...... 27 If...... 38, 45, 49, 54, 57, 63, 64, 119, 129, 140 ...... 75, 107 J.P. Morgan...... 38, 65, 75, 84, 94, 129, 19 J.P. Morgan Chase...... 129

168 The Cerulli Report | Asset Management in China 2020 Index of Companies

Key Asset Management...... 23, 7, 8 Lufax...... 49 Macquarie...... 56 Macquarie Infrastructure and Real Assets...... 56 ...... 120 Merrill Lynch...... 130 Met...... 63 Morgan Stanley...... 38, 84 Neuberger Berman...... 38, 44, 65, 75, 107, 19 NN Investment Partners...... 119 Noah Holdings...... 60 Nomura...... 38, 60, 84 People’s Bank...... 25, 99, 126 Pillar...... 112, 114, 116, 119, 121, 122, 11, 165, 166 PineBridge Investments...... 107 Ping An of China Asset Management (Hong Kong)...... 140 Principal...... 89 Prudential...... 38, 87 Public Mutual...... 23, 36, 38, 64, 75, 80, 92, 93, 104, 108, 16, 18, 19 Regions...... 121 RISE...... 57 Russell...... 119 Russell Investments...... 119 ...... 57, 120, 135 Securities and Exchange Commission...... 62 Standard Life...... 38, 118 Standard Life...... 38, 118 Temasek...... 38, 45, 84 Tencent...... 25, 48 Tianhong Asset Management...... 27, 67, 71 U.S. Bank...... 6 UBS...... 38, 84 Value Partners...... 107 Vanguard...... 25, 45, 48, 57, 9 WeChat...... 48

The Cerulli Report | Asset Management in China 2020 169 Index of Companies

Wellington...... 56 Wellington Management...... 56 Zhong Ou Asset Management...... 89, 141

170 The Cerulli Report | Asset Management in China 2020