Chinese investors value strong parent, branding above all when it comes to foreign asset managers, Broadridge survey finds

When it comes to foreign asset managers, Chinese retail investors today are leaning towards those with a strong parent, branding and investment in China over the size of the assets they manage onshore, according to a survey by financial services firm Broadridge.

Over the next four years, foreign asset managers will be an important part of the growth into a US$9.4 trillion Chinese market as exchange traded funds (ETFs) and mutual funds achieve a higher penetration, said Yoon Ng, director of Asia Pacific insights.

In its inaugural “China power ranking” survey for foreign asset managers, which asked 1,500 retail investors in China to rank 60 global managers based on a scorecard, it found that the top three foreign managers were UBS Asset Management, JP Morgan Asset Management and BlackRock.

“Chinese investors today do not directly associate foreign managers with their investment capabilities or strategies. Rather, some of them have been able to leverage on their parent group branding and distribution networks and do well in the country,” said Ng.

Among the top 10, third-ranking BlackRock is one of three independent managers that are not backed by a banking or insurance group. The other two are Invesco (ranked fourth), and Schroders (ranked seventh).

The findings for foreign managers contrast with those for their domestic counterparts. Tianhong Asset Management – the manager behind the world’s second-largest money market fund, Yu’eBao – was the top-rated manager among retail investors, due primarily to its sheer size. The money market fund had just over a trillion yuan of assets under management at the end of June.

E Fund came second, with interviewees picking it for its equity investment capability.

As part of the assessments, foreign managers were ranked based on the extent of business scope they have in China, which is enabled by various types of licences and quotas that they have successfully obtained from regulators to enable cross-border portfolio investments. Such investments are often seen as underlining their commitment to China by taking on risk, or how much “skin in the game” they have.