UBS Group’s asset management unit said on Thursday it aims to launch its first Chinese private fund by the end of the year, as Europe’s fourth-biggest money manager seeks a slice of China’s fast-growing, 10 trillion yuan ($1.54 trillion) private fund market.
In addition to the new fund, which will either invest in stocks or bonds, UBS Asset Management (UBS AM) is also studying plans to launch funds in China to invest in alternative assets such as real estate.
Rene Buehlmann, Asia Pacific head at UBS AM, said the move was driven by a desire to capture the huge growth potential in China’s fund industry.
“A lot of investors will move from bank deposits into mutual or private fund space,” Buehlmann said, forecasting the segment in China could grow five-fold to more than $10 trillion in 2021. “We would like to become the first call from clients in China.”
Although foreign investors have long been allowed to launch mutual funds in China through minority-owned local ventures, the government has only recently given them full access to the private fund market, which targets institutions and wealth individuals.
Lured by that market, a growing number of global money managers including Aberdeen Asset Management, Bridgewater Associates and Vanguard have recently set up wholly owned subsidiaries, seeking to launch funds.
“Many asset managers have moved quickly from thinking about this business, together with the market potentials, to actually acting on it,” said Ivan Shi, director of research at fund consultancy Z-Ben Advisors.
Aries Tung, head of China strategy at UBS AM, said launching private funds in China represented the latest piece of the company’s business jigsaw in China, which already includes inbound and outbound investment products, as well as a mutual fund venture.
“We help foreigners invest in China, and also help Chinese invest overseas. Now, we will help Chinese invest locally. Our rivals may not have such a complete product line.”
UBS AM’s first China private fund will be launched through its wholly owned China unit, UBS AM (Shanghai) Ltd.