Fidelity launches its first fund in China

Daisy Ho, managing director for Asia Pacific excluding Japan at Fidelity International.

Global asset management company Fidelity International will launch its first investment product in China within six months, after it has become the first foreign asset manager to gain a license to issue private funds in the country that can invest in Chinese securities markets, a senior executive of the fund said on Thursday.

The company intends to offer its Chinese clients, mainly large institutional investors, such as insurers and pension funds as well as high net worth individuals, a long-term and stable solution to manage their assets onshore, said Daisy Ho, managing director for Asia-Pacific excluding Japan at Fidelity International.

The license allows the fund to tap into the growing demand for asset management by Chinese investors. Fidelity International already has a $1.2 billion quota under the Qualified Foreign Institutional Investors to invest onshore.

Ho said that competition in the Chinese asset management industry is getting increasingly intense. It is a challenge for Fidelity to understand and meet the highly diverse demands of Chinese clients.

"We are optimistic about the long-term prospects and the vast potential for asset management in the Chinese market," Ho said, adding that the fund will adopt a long-term investment strategy and will not engage in high-risk or quantitative trading.

China has approved several major foreign asset management firms, including BlackRock and Citadel, to raise onshore funds from Chinese clients and invest in overseas markets. But none of them is allowed to invest in the domestic markets.

Jackson Lee, chief representative of Fidelity International's Beijing office, said that the fund will bet on the long-term opportunities in China, underpinned by the trends such as the continued liberalization of the capital market as well as an aging Chinese population who have an urgent need for pension management.

Chen Huozhu, a researcher at Simuwang.com, an online investment information provider, said that greater foreign participation will help raise the bar of professional asset management services in China since local Chinese asset managers will face greater competition.