The first Sino-foreign fund management joint venture to win an investment mandate from China's National Social Security Fund (NSSF) has been allocated an initial portfolio of 1.2 billion yuan, a source close to the company says. Shenzhen-based China Merchants Fund Management (CMFM), 30 per cent owned by Dutch ING Group, began investing the portfolio for NSSF last week. It was another landmark in the march of foreign players into China's infant but promising pension industry. NSSF was set up in 2000 as a national fund of last resort to help plug widespread holes in provincial social security systems. It had amassed assets of 149.2 billion yuan by October from government allocations and proceeds from mandatory sales of state-owned shares in the course of offshore stock offerings by mainland companies. CMFM, the earliest Sino-foreign joint venture in the mainland and with about 16 billion yuan of assets under management, beat mainland money managers invested in by European and American rivals such as ABN Amro, Invesco, Fortis and Allianz to pick up a mandate from NSSF in October. CMFM is sharing initial investment portfolios of 4.8 billion yuan with Guangzhou-headquartered E Fund Management, Shanghai's Guotai Asset Management and Beijing-based China International Capital Corporation, an investment banking joint venture led by China Construction Bank and Morgan Stanley. More funds would be entrusted to them during their three-year investment mandates, Guangzhou-based newspaper 21st Century Business Herald quoted Li Keping, NSSF's investment head, as saying. In late 2002, six other fund managers won the first batch of two-year mandates NSSF handed out to investment intermediaries. China, with a population of 1.3 billion, is moving from state provided cradle-to-grave welfare benefits to a system based on employer and employee contributions. That development, combined with changing demographics on the back of lengthening life expectancy and the country's one-child policy, is set to trigger exponential growth in the nation's pension management industry over the next few years. This has served as a strong magnet for foreign financial institutions eager to set up fund and pension management operations on the mainland.