BlackRock targets China’s vast pool of savings with ETFs, ‘quant’ strategies

BlackRock plans to tap the needs of institutional and retail investors in China through a variety of financial products ranging from exchange traded funds to more exotic funds, as part of a push made possible by its new licence to operate an onshore fund management business.

BlackRock, which manages US$6.32 trillion in client assets globally, in January was granted a private fund management licence [PFM] by the Asset Management Association of China.

The licence approvals handed out to a number of foreign fund managers opens the way for BlackRock, along with Invesco, Schroders, Neuberger Berman, and Fidelity, to operate separate, wholly-owned private fund management businesses in competition with domestic Chinese fund managers.

BlackRock’s global head of active equities Mark Wiseman sees tremendous business opportunity in the fund management sector. China’s 8,752 domestic fund managers oversee 2.56 trillion yuan (US$400 billion) in assets for both retail and institutional investors, according to data from the association.

“It is incredibly important to have reliable, high quality investment products for Chinese savers. We believe that global asset managers and institutional investors alike can help bring more discipline to this market, which is still dominated by retail investors,” said Wiseman during the Global China Summit conference in Beijing organised by JPMorgan Chase & Co.

BlackRock also wants to promote its expertise in quantitative investment, he said, referring to the use of big data analytics and “quant” analysis to identify trading opportunities for products that can be offered to qualified retail investors.

BlackRock already offers investors from outside China exposure to mainland equities through its systematic active equities strategy, which makes use of algorithms, machine learning, and artificial intelligence in portfolio management.