BlackRock goes hi-tech, low-fee as its appeals to China’s wealthy investors with its first hedge fund
BlackRock’s new China A-Share Opportunities Private Fund 1 will charge well below the 2 per cent fee and 20 per cent carried interest that rivals levy
The world’s biggest money manager is pushing into China’s cutthroat hedge fund market with an offering that charges less than half the typical fees and has delivered above-average returns.
BlackRock started selling the fund to Citic Securities clients last week, and will charge a 0.75 per cent management fee while taking 10 per cent of profits, according to people familiar with the matter. An offshore version of the strategy, which makes stock picks based on big data gleaned from social media and other sources, delivered an average 22 per cent annually from November 2012 through last year, said the people.
The US$6.3 trillion money manager is vying with global rivals as well as thousands of local competitors in one of the world’s fastest-growing investment markets, where millionaires are being created at a dizzying pace. UBS Group and Bridgewater Associates are among firms that are taking advantage of the historic opportunity after the Chinese government opened the private securities fund business to foreign managers.
BlackRock may have an edge in the crowded market: For the new China A-Share Opportunities Private Fund 1, it’s charging well below the 2 per cent management fee and 20 per cent carried interest that Chinese rivals levy.
Returns posted by the offshore version of the strategy also beat the 17.7 per cent average of 495 Chinese stock funds that have a track record for the five years ending 2017, according to private fund tracker Shenzhen PaiPaiWang Investment & Management.
