(Bloomberg) – Invesco Ltd. aims to grow over 40% of its assets in China in three years, seeking to defend its leadership position among overseas managers by leveraging its years of local experience as more rivals like BlackRock Inc. and Amundi SA is stepping up its forays into the Chinese market.
The $ 1.2 trillion asset manager aims to increase Chinese clients’ assets under management to $ 100 billion by 2023, from around $ 70 billion currently, according to Andrew Lo, head of the Asia region. Peaceful. Growth will come primarily from onshore mutual fund joint venture Invesco Great Wall Fund Management Co., its primary focus in China, where Atlanta-based Invesco is making “progress” to increase its stake to 51% and ultimately take the lead. control, he said.
Competition in China’s 100 trillion yuan ($ 15.2 trillion) asset management market intensifies as five global players, from BlackRock to Neuberger Berman, have obtained approval or applied for fund licenses wholly-owned after China eased restrictions in April. BlackRock and Amundi have also created wealth management joint ventures with large local banks to extend their reach to Chinese investors. While Invesco keeps an “open mind” in forging other local alliances, it is focused on harnessing and strengthening the joint venture’s 17-year reputation with clients and its understanding of the market, a gap that , according to Lo, can help Invesco be competitive.
“The biggest difference between us and many global competitors is that we’ve been doing this for 17 years,” he said, citing the ups and downs of recent years and competing with implicitly guaranteed investment products that have only recently been banned. “Now I think that’s really the inflection point.”
This year, Invesco was ranked # 1 in onshore worldwide by consulting firm Z-Ben Advisors Ltd., thanks in large part to Shenzhen-based Invesco Great Wall, which has raised 50.7 billion yuan in funds. mutual funds this year in mid-August, the most among the global players. Overall, it ranks third, behind JPMorgan and UBS Group AG.
Invesco, which runs the local business with just a 49% stake, has given the local team more decision-making power than many global competitors, thus contributing to its performance, according to Peter Alexander, founder of Z-Ben, based in Shanghai.
Invesco will continue to hire locally, having added 27 people to the joint venture already this year, with positions ranging from research and fixed-income investments to marketing and digital operations, Lo said, declining to give details of other projects.
Expected asset growth could hopefully strengthen Invesco’s position among the top 15 mutual fund players in China, excluding money market funds – the ranking it most interests us – in three years, compared to 19 now, he said. The list is still led by local players like E Fund Management and China Universal Asset Management.
“I don’t think it’s an easy market – there are a lot of nuances. You have to be very nimble, very fast, ”Lo said. “It won’t be an easy market for newcomers.”
As competition in the local private funds market also intensifies, with UBS and Winton Group leading the way and Ray Dalio’s Bridgewater Associates catching up, Lo said the all-foreign Shanghai-based Invesco company, which owns the private fund license, operates primarily as an onshore research platform. The company has only launched one product after registering three years ago, up from 16 at UBS.
Lo declined to say whether the company intends to eventually dissolve it, which would be required by Chinese regulations if Invesco wins 100% of the mutual fund business.
As Invesco faces cost pressures globally, China is a major growth opportunity for the company and would see additional resources, he said. The company can apply for a mutual fund advisory license, which has enabled Vanguard Group to operate the fund market without its own onshore fund management business.
Invesco is also planning some ETF products to tap the growing interest of global investors to invest in Chinese assets, which could grow its inbound business to around $ 80 billion currently, although onshore business remains the “biggest.” cake”.
China is “an extremely exciting market for many years to come for fund managers,” with good growth expected from retail, institutional, digital and advisory businesses, Lo said. The company’s three-year goal is “not easy, but realistic”.
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