Fidelity International Plans Pullout from China Fund
Authored by Anders Corr via The Epoch Times
Fidelity International (FIL) is reportedly the latest fund manager to plan a pullout from its China fund. FIL launched a wholly-owned subsidiary in Shanghai three years ago, but a lack of demand from retail investors led to disappointing growth.
According to Reuters, “A combination of fierce local competition, frequent leadership turnover and chronic struggles to build scale ultimately convinced global FIL executives that the China retail venture was untenable.”
FIL has $1.18 trillion in assets under management (AUM). It started its China fund in 2023. After several years, it had reportedly reached only about $670 million (less than 5 percent of the goal) and began planning an exit.
Fidelity follows multiple other global asset managers that are backing away from China amid domestic competition and geopolitical tensions. These include Schroders, Legal & General, and Vanguard.
In 2019, Beijing invited global fund managers to establish wholly-owned China funds. For some, like Fidelity, the venture did not end well.
Several large asset managers converted their joint ventures into wholly-owned funds and found success. However, newer ventures like those of Fidelity, Schroders, and BlackRock faced challenges in China’s competitive market.
While some foreign-owned funds struggled, others like JP Morgan Asset Management China and Manulife China have seen better returns and maintained a strong presence.
Despite the challenges faced by foreign companies in China, the domestic fund market remains dominated by local players with established networks and brand recognition.
Foreign companies looking to compete in China may need to localize their operations and adapt to the unique market conditions.
With an uneven playing field and regulatory challenges, China presents obstacles for Western investors looking to succeed in the market.
Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times or ZeroHedge.