“The Future of Asset Management in China” Provides Financial Institutions Insights
on the Ever-changing Asset Management Industry
HONG KONG, Oct. 29, 2019 – FleishmanHillard today released a new report, “The Future of Asset Management in China,” offering insights to global asset managers assessing opportunities in China. The report features analysis drawn from a survey of mainland Chinese investors’ attitudes and behavior, plus an overview of the latest industry trends.
The key findings of the report show that when selecting a fund manager, mainland Chinese investors put particular emphasis on brand credibility, performance and multi-channel communications. Environmental, social and governance (ESG) capabilities also are a requirement for the majority.
“By examining mainland investor behavior together with liberalization trends in China, we’ve been able to derive insights on the future of asset management in China. These insights can help industry players understand investor expectations and plan their communications programs more effectively,” said Patrick Yu, Asia Pacific lead for FleishmanHillard’s Financial and Professional Services practice. “Asset management is just one component of China’s reform agenda. For a world where the fluidity of fund flows enables Chinese and global investors alike to create borderless investment strategies, all parties need to work together. For that to happen and for everyone to benefit, the need for effective communications is essential.”
The report includes the following findings from mainland investors:
- Credibility and performance are key. Investors emphasized that asset manager brand credibility (74%) and investment performance (64%) are critical. It’s not surprising that Chinese investors (like those elsewhere in the world) make investment returns a priority, and the fact that they will invest in a credible global brand over one offering better returns is notable. This clearly demonstrates the importance of reputation equity for firms operating in China. In particular, 69% chose products from wholly foreign-owned enterprises (WFOEs) and joint ventures (JVs) over the local asset managers because they place higher trust in global brands.
- Strategy and performance of WFOE private fund products attract the vast majority of respondents. In a competitive and crowded marketplace, a very positive indicator for foreign fund managers is that 91% of respondents said they already invest in WFOE private fund products, despite these products only recently becoming available in China. Respondents said they liked these funds’ strategies above all (93%), with a slightly smaller, but still dominant, proportion citing their performance (87%) as a key factor. This is despite their fees being higher than comparable products by Chinese asset managers.
- Environmental, social and governance (ESG) themes are on the rise for mainland investors. While the most important capabilities of a fund manager are transparency in communications, sophisticated risk management and transparent fee disclosure, 52% of respondents said ESG expertise is a very important requirement for fund managers, with 94% overall considering it either very or somewhat important. While not top of the list of key qualities, the interest in ESG was far higher than expected. It points to the immense potential for sophisticated global firms to conquer thought leadership in this space based on their global expertise.
- Multi-channel communications critical to engage mainland investors. Respondents’ preferred choice of information channel varied, with similar numbers favoring independent financial advisors (IFAs), financial media, social media and websites. In a market that is considered far ahead in its adoption of digital strategies, online patronage for funds was rated the second most popular channel (76%), trailing IFAs and intermediaries (88%). The findings show that digital strategies need to be a core component of any sales and marketing effort in China, while the popularity of IFAs shows the ongoing importance of people-to-people relationships and the need for trusted figures when it comes to important investment decisions.
FleishmanHillard’s “The Future of Asset Management in China” report includes qualitative and quantitative data. FleishmanHillard TRUE Global Intelligence™ fielded an online survey of 250 Chinese investment professionals between Aug. 10 and Aug. 20, 2019. All respondents to the survey self-identified as working in investment, finance or banking, and had traded or invested in at least one of the following: equities fund (87%), fixed income (73%), ETF and alternatives (82%), balanced funds (65%) or PE funds (66%).