FleishmanHillard China Asset Management Report Shows Investors Need Foreign Firms to Justify Higher Fees
Performance, credibility and online communications are key, but ESG and other differentiators matter too
ST. LOUIS, Sept. 15, 2020 – Fund managers’ investment performance, brand credibility and online communications are key factors to attract Chinese investors, according to a new report published today by FleishmanHillard.
The report, The Future of Asset Management in China 2020, offers insights to global asset managers assessing opportunities in China. It is the second annual China-focused asset management report published by FleishmanHillard, which features analysis drawn from an online 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 emphasis on performance, credibility and online communications. However, while Chinese investors will pay higher fees for foreign fund management relative to local managers, they expect to get some added value in the form of unique investment strategies and capabilities. Notably, ESG product offerings are a requirement for the majority.
“Despite the COVID-19 pandemic and geopolitical issues, the asset management industry in China continued to grow healthily thanks to the ongoing relaxation of market access rules for overseas asset managers,” said Patrick Yu, Asia Pacific lead for FleishmanHillard’s Financial and Professional Services practice. “Our second China-focused asset management report provides useful insights to help industry players understand investor expectations and plan their communications programs more effectively. Understanding the industry landscape and having a well-thought out communications strategy continue to be important for overseas asset managers to flourish and attract mainland investors.”
The report includes the following findings from mainland investors:
- Performance and credibility continue to be key. Asset management performance and credibility remain the most important factors when selecting a fund manager, but there is a fall in the number who consider it very important – performance factors dropped to 56% from 64% last year and credibility fell to 55% from 74%. However, net importance (combining “very” or “somewhat” important) shows little change from last year.
- QDLP and WFOE fund products continue to entice mainland investors. Just over 90% of the investors had invested in Qualified Domestic Limited Partner (QDLP) products run by overseas asset managers. Most of them experienced higher service fees, but they found that acceptable. Almost nine out of 10 (89%) of the investors had purchased private fund products from overseas asset management houses that have a Wholly-Foreign-Owned-Enterprise (WFOE), down a fraction from last year (91%). Feedback on WFOE asset management funds was similar to QDLP, conveying that performance is good and investment strategy is unique. While the fees are on the high side relative to the local players, they are very manageable. Appetite for WFOE products clearly remains very strong, reflecting the confidence many Chinese investors have in overseas fund managers.
- Prospect for overseas asset managers in onshore retail funds looks promising. Thanks to ongoing relaxation of policies, the local regulator in China has recently approved the first overseas manager to run an onshore retail fund management platform. It is promising to see that nine out of 10 investors would be interested in onshore retail funds offered by overseas asset managers. The prospect of global brands with their own strategies fused with mainland China expertise for the China market is clearly compelling for local investors.
- Digital and, in particular, mobile distribution channels for thought leadership and products are critically important during and after COVID-19. The pandemic has sparked the use of more online channels for patronage or access to fund information in China, with 68% opting for more online channels. This is likely here to stay, emphasizing the need for a digital – and mobile – strategy.
- COVID-19 has had relatively little impact, yet the vast majority have changed their approach to risk as a result of the U.S.-China trade tensions. Four out of five investors say COVID-19 has affected their confidence in their financial situation, but just one in five (21%) say they are extremely uncertain about their financial situation in the near term. Overall, the impact looks to have been relatively moderate – for 56% it is described as low. Yet for investors, the survey shows that one-third increased their asset allocation risk appetite as a result of the trade tensions. Interestingly, more than 90% said they had altered their approach because of the tensions.
- Greater risk management (56%), transparency in communications with customers (50%) and strong ESG product offerings (50%) continue to be the top three most important traits for an overseas asset management operating in China.
FleishmanHillard’s “The Future of Asset Management in China 2020” report includes qualitative and quantitative data. FleishmanHillard TRUE Global Intelligence™ fielded an online survey of 250 Chinese investment professionals between July 20 and July 27, 2020. 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 (85%), fixed income (76%), ETF (72%), balanced funds (63%), PE funds (58%) or alternatives (29%).
FleishmanHillard specializes in public relations, reputation management, public affairs, brand marketing, digital strategy, social engagement and content strategy. FleishmanHillard was named 2019 PRWeek U.S. Outstanding Large Agency; 2019 Holmes Report North America Large Agency of the Year; ICCO Network of the Year – Americas 2017-2019; Agency of the Year at the 2017 and 2018 North American Excellence Awards; 2018 Large Consultancy of the Year by PRWeek UK; PR News’ Best Places to Work in PR 2016-2018; Human Rights Campaign Best Places to Work for LGBTQ Equality 2018-2020; PR Awards Asia 2017 Greater China Agency of the Year; and NAFE’s “Top Companies for Executive Women” 2010-2020. The firm’s award-winning work is widely heralded, including at the Cannes International Festival of Creativity. FleishmanHillard is part of Omnicom Public Relations Group, and has 80 offices in more than 30 countries, plus affiliates in 50 countries.
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