FleishmanHillard China Asset Management Report Shows Chinese Investors Placing High Emphasis on Asset Managers’ ESG Credentials
Demand for Overseas Asset Managers’ Onshore Retail Funds is Robust as Foreign Competition in China’s Retail Fund Industry Becomes a Reality
The report offers insights for global asset managers assessing opportunities in China. It is the third annual China-focused asset management report published by FleishmanHillard and its TRUE Global Intelligence practice, and features analysis drawn from an online survey of mainland Chinese investors’ attitudes and behaviors, plus an overview of the latest industry trends.
With the increasingly strong interest in ESG investment, it is notable that a combined 95% of Chinese investors think that strong ESG product offerings are “very important” or “somewhat important” for overseas asset managers operating in China. This ranks the same as transparent fee disclosures (95%), followed by transparency in customer communications (94%). In addition, just over half of Chinese investors (53%) believe that the commitment of an asset manager to ESG is “very important,” with another two-fifths (43%) saying it is “somewhat important” – making it the third most important factor when choosing an asset manager. The credibility (61%) and performance (58%) of the asset management house continue to be the most important decision drivers.
Overseas asset managers working to directly offer retail onshore funds in China for the first time this year should see strong demand for their products, with 95% of Chinese investors stating that they would be “extremely” or “very interested” in such offerings in the market.
“China is emerging from the pandemic in a strong position, which is feeding into growing confidence among local investors and in turn benefiting demand for foreign asset managers’ services as they enter into this fast-opening market,” said Patrick Yu, Asia Pacific lead of FleishmanHillard’s Financial and Professional Services practice. “With full foreign competition in China’s asset management industry becoming a reality, it has never been more important for players in the industry to understand the needs of Chinese investors and to have a robust communications strategy that responds to these sentiments and supports business expansion in the country.”
The survey also found:
- Qualified Domestic Limited Partnership (QDLP) and private market funds from overseas asset managers continue to draw interest among Chinese investors. Ninety-five percent of investors show interest in QDLP funds, whereas 93% have purchased private market funds from overseas asset managers with Wholly Foreign-Owned Enterprise (WFOE) licenses. Better product performance and a clear investment strategy are the main reasons for investors to opt for products from overseas asset managers rather than onshore products by the local counterparts.
- In the next 12 months, investors are interested in globally focused, or China/Hong Kong SAR focused liquid asset funds. It is clear that Chinese investors are looking for more broad, global exposure to liquid assets in their portfolios over the next 12 months, followed closely by allocations closer to home in China and Hong Kong SAR. It is interesting, however, to see that local investors are as interested in cryptocurrency funds as they are in fixed income funds and Exchange Traded Funds (ETF), despite recent price fluctuations.
- WeChat is important for reaching Chinese investors, but independent financial advisers, bank intermediaries and financial media are also important. Thirty-seven percent of investors use WeChat for information on funds and investment products, of which 73% used the platform to find corporate information (global and China) – up a significant 19% from last year (54%). However, independent financial advisers or intermediaries from banks and financial media also continued to be the most important sources of information.
- China’s effective response to COVID-19 has boosted Chinese investor confidence. There has been a jump in the number of those who are now confident in their personal financial situation and believe the pandemic is having no impact – 34%, up from 23% last year. The sentiment reflects China’s rapid and effective response to COVID-19 and the quick return to normality in the country.
- Ongoing U.S.-China trade tensions are leading to a more “risk off” sentiment for local Chinese investors. Compared with last year’s fairly even split between investors who were more “risk on” and those who were more “risk off,” the needle appears to have swung more in the direction of lower risk sentiment as tensions look set to continue for the long term. A combined 53% of respondents say they are moving more or some of their investments into lower risk options, compared with 32% who have a higher risk appetite.
FleishmanHillard’s The Future of Asset Management in China 2021 report includes qualitative and quantitative data. FleishmanHillard TRUE Global Intelligence fielded an online survey of 260 Chinese investment professionals between July 16-22, 2021. 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 (95%), fixed income (89%), ETF (88%), alternatives (57%), balanced funds (86%) or PE funds (78%).
FleishmanHillard specializes in public relations, reputation management, public affairs, brand marketing, digital strategy, social engagement and content strategy. FleishmanHillard was named 2020 Campaign Global PR Agency of the Year; 2019 PRWeek U.S. Outstanding Large Agency; 2019 Holmes Report North America Large Agency of the Year; ICCO Network of the Year – Americas 2017-2020; PRovoke Media Greater China Consultancy of the Year 2020; PRWeek UK Best Places to Work 2020; Human Rights Campaign Best Places to Work for LGBTQ Equality 2018-2020; 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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