Money

Top fund manager eyes China's promising fund market

(Xinhua)
Updated: 2011-05-19 17:17

BEIJING -- Though in the early stages of development, China's fund market has started to attract top international talent with its significant growth potential.

Lindsay Wright, head of strategy and business development at China's top-performing Harvest Fund Management Group, is a senior fund manager who believes in the Chinese market's potential and future opportunities.

"The industry is still at an early stage of development, but has lots of opportunities from a strategic domestic growth perspective, an innovation perspective and also from a global expansion perspective," she said.

Before joining Harvest in September 2010, Wright was the global head of strategy and business development for New York-based Deutsche Asset Management. Her experience with Deutsche Asset Management and Deutsche Bank spans 24 years.

"Development of the Chinese social security and pension funds systems will provide tremendous opportunities for fund managers," said Wright.

She predicts that the mutual fund management industry may become one of the key managers for Chinese pension assets due to greater transparency and investment returns compared to banks and insurance companies.

Corporate annuity funds, the coverage of which is still limited, will also require more professional asset managers and innovative products, creating further growth opportunities for the mutual fund industry, said Wright.

Wright said talent shortage is one of the major challenges the industry faces. With new funds continuously coming to the market, experienced managers prefer to run private funds for higher commissions and less pressure with frequent performance rankings.

Banks dominating mutual fund distribution also remains a key challenge, according to Wright.

In China, around 80 to 90 percent of Chinese funds are sold through domestic banks, with the top four banks controlling distribution flows and all products.

This has resulted in fund houses having limited room for bargaining, which in turn reduces profit margins, said Wright, adding that a significant increase in new products has worsened the situation.

But with overseas expansion just kicking off, Wright believes that China's mutual fund industry faces tremendous opportunities both at home and abroad, and the industry will attract more and more top international talents.

According to Wright, qualified domestic institutional investor (QDII) provides a significant opportunity and a platform for Chinese fund managers to build offshore capabilities on their path to global development.

The Chinese QDII funds met with some setbacks due to the global financial crisis, but it was only an unfortunate matter of timing, she said.

As investors mature and learn to divert risks, the QDII market will be a large and key growth segment for the industry, said Wright.

In recent years, QDII, together with the establishment of overseas branches and cooperation with international institutions, has helped many Chinese fund management companies accelerate overseas expansions.

Still, Wright warns that international expansion is not easy and is highly competitive.

"The Chinese fund management companies going offshore require strength and credibility in investment, research capabilities, product range, distribution reach as well as client service," said Wright.