China’s First Foreign Asset Fund Favours Bond Market


The first, and thus far only, wholly-foreign owned private asset management company in China plans to make its debut on the market with a bond fund.

Earlier this year Fidelity International became the first overseas company to establish a wholly-owned private fund management company in China that is registered with the Asset Management Association of China (AMAC).

This means Fidelity International is allowed to develop investment products in China for purchase by qualified Chinese institutional and high  net worth investors, via its domestic vehicle FIL Investment Management (Shanghai) Company Limited.

FIL Investment has since applied for its first domestic product with AMAC – the “Fidelity China Bond No. 1 Private Fund.”

Caixin reports that the the fund currently only has one investor, which is an affiliate of Fidelity.

“This is standard practice of Fidelity when trialling new products in overseas markets,” said Li Shaojie, the general director of Fidelity International for China, to Caixin. “We first use the company’s own capital to invest and operate for a period of time…and after testing investment strategy and overall operation, take [the product] to market to raise funds from qualified investors.”

“This is the first time that we’re entering China’s private fund market, so we’re more cautious,” said Li.

Li said that Fidelity favoured bonds despite recent market fluctuations.

“From a long-term perspective we’re full of confidence in the Chinese bond market. Prior to this Fidelity has already used channels such as QFII to invest in Chinese bond markets, and already has engaged in some research and understanding.”

Fidelity International’s general manager for Asia (excluding Japan) He Huifen, said that Fidelity had its own unique research methods for uncovering investment opportunities on China’s domestic bond market, given the lack of ratings agencies.

“We hope to be able to make use of our research capability to provide Chinese investors with a private fund that has research at its core,” said He.