Fidelity 700M Dollar Win: In a strategic move, Fidelity International has made significant strides in China’s mutual fund market by securing an impressive $700 million for its inaugural fixed-income mutual fund. This achievement marks a notable success for Fidelity, especially in the fiercely competitive landscape of China’s mutual fund industry, which boasts over 150 players, including global giants like BlackRock, Schroders, and JPMorgan Asset Management.
Helen Huang, Managing Director of Fidelity International in China, expressed her satisfaction with the fundraising size, considering the intense competition in the local market and Fidelity’s relatively limited track record in China. The bond fund, Fidelity’s second mutual fund product in China, primarily attracted institutional investors during a three-week, expedited subscription period.
China’s mutual fund industry has witnessed a surge in activity, with over 200 bond products launched this year, raising an average of 2.28 billion yuan each. Fidelity’s accomplishment stands out, with its bond fund focusing primarily on government bonds. Alvin Cheng, Portfolio Manager at FIL Fund Management Co Ltd, Fidelity’s China unit, emphasized the company’s plans to gradually expand its fixed-income offerings in China, encompassing corporate bonds, green bonds, and even convertibles.
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Despite its success, Fidelity International faces challenges in fully exploiting its capabilities in China, particularly due to the country’s stringent data security rules. These rules currently prohibit the export of research data and reports generated by Fidelity in China to offshore locations. Helen Huang disclosed that Fidelity is actively lobbying Chinese regulators to relax these restrictions, advocating for cross-border sharing of research within the Fidelity group.
The proposal aligns with industry sentiments, as the Asia Securities Industry & Financial Markets Association (ASIFMA), a financial lobby group, has also emphasized the importance of allowing financial firms operating in China to share information across borders. Huang expressed optimism about possible changes, noting that regulators are actively discussing the matter.
Fidelity’s approach in China reflects a patient and strategic expansion, as the asset manager aims to lay the groundwork for multi-asset allocation, pursue licenses to facilitate Chinese investments offshore, and explore opportunities in the country’s pension market. While navigating challenges, Fidelity International remains committed to its long-term growth strategy in China’s dynamic financial landscape.