After seeing the rapid growth of China’s online money market fund industry, international fund managers are looking to team up with internet giants such as Alibaba, Tencent, and Baidu to win their share of the country’s ever-growing investment pool pie, the FT reports.
Talking to the FT, Barings Asset Management’s head of business development, David Stevenson, alluded that these partnerships could be “massive,” adding:
“Why would an asset manager not want access to a distribution capability with that depth and breadth? That level of distribution reach cannot be achieved through any bank or sales force, regardless of size.”
In the 18 months to the end 2014, assets under management of Chinese money market funds grew a staggering 600%, largely driven by retail investors snapping up e-commerce funds. Alibaba’s Yu’E Bao fund for example, rose from nothing to handling over $92 billion in assets in less than two years.
The initiative isn’t without its challenges though, completely ignoring the country risks involved, from a legal standpoint, international funds may not even be allowed to be sold online, and as Fitch has pointed out, developing these relationships alone is a huge hurdle in itself, and that’s the first thing these asset managers need to deal with.
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