(January 30, 2014) – Chinese regulators gave the green light to the nation’s first insurer-backed mutual fund in late December 2013, and within 10 days of opening, the China Life AMP Money Market Fund had raised RMB 11.9 billion (US$1.97 billion).
The fund is a joint venture between a domestic powerhouse—China Life, the country’s largest insurer—and its longtime strategic partner, Australia’s AMP Capital.
“Our relationship with China Life was absolutely critical in launching this fund,” Anthony Fasso, AMP’s international chief executive, told aiCIO. “It would not have been possible to enter the industry without a partner on the ground.”
The formal relationship between the two firms dates back nearly eight years. In August 2009, they furthered their mutual commitment with a strategic cooperation agreement. That gave rise to the money market fund, which is China Life’s first asset management venture with a foreign partner on the insurer’s home turf.
The relationship is also far from over, according to Fasso, who heads up AMP’s partnership strategy and has spent the last two decades based in Hong Kong.
“The next step would be to issue more funds,” he said. “In China, firms typically launch one mutual fund, raise it, release it out into the market, and then launch another fund in three or four months’ time. Then another. The natural progression would be from fixed income to domestic equity, and on to a domestic balanced fund. Eventually, we may look at international assets.”
The market could absorb that and much more, according to Boston-based research firm Aite Group. By its calculations, 88% of investable individual wealth in China was as of yet unmanaged. Private banks led in market share with 7%.
“China represents perhaps the biggest prize available in the global wealth management sector,” wrote Senior Analyst Stephen Wall in a January 24 report. “But its market characteristics—scale, regulatory environment, infancy, and speed of change—present a tough and evolving challenge for any wealth management business, big or small, local or foreign, to prosper.”
The partnership of China’s largest direct institutional investor and a foreign asset manager with more than a century of experience has proved itself a contender.
For AMP, at least, the stakes are high. Its commitment to both the Asian market and strategic alliances goes beyond China Life: The Sydney-based company recently sold 15% of its asset management arm to Mitsubishi Financial to facilitate access to Japan.
What’s next in the partnership pipeline for AMP? Nothing imminent, according to Fasso. “I’d say we’ve got enough on the go at the moment.”