Despite the downturn in China markets in the second half of 2015, Chinese fund management companies saw revenues and profits rising last year, with double-digit and even triple-digit net profit growth seen during the year, according to a new report by Cerulli Associates.
The report, entitled ‘Asset Management in China 2016’, is the second of three parts: two quarterly strategic overview reports followed by Cerulli’s annual report scheduled for release in the third quarter of 2016.
Cerulli’s research shows that six fund management companies (FMCs) reported net profits of more than RMB1bn (US$149.7m) in 2015.
China Asset Management was the most profitable with RMB1.41bn (US$210.9m) in net profit, followed by ICBC Credit Suisse Asset Management with a net profit of RMB1.29bn (US$193m) for 2015.
Average net profit 30.4%
For the largest 20 managers in China, the average net profit margin was 30.4% in 2015 while the net profit yield was approximately 28.5 basis points. Fullgoal Fund Management showed the best net profit yield last year at 56.9 basis points.
Cerulli added that institutions continue to play a big part in growing FMCs revenues and profits. “Institutional investors are estimated to have contributed one-third of assets under management as at end-2015,” said Miao Hui, senior analyst with Cerulli who leads the China research initiative. “We understand that they prefer oneto- one segregated accounts because such accounts are more flexible in active management and in using leverage.”
‘Customised mutual funds’
Institutional investors also welcomed “customised mutual funds”, or funds launched for specific investors that meet the minimum number of subscribers, with lower leverage, but it will be hard for FMCs to sustain 2015’s profit levels in 2016, Hui added.
“While institutional investors’ participation in capital markets is expected to grow in 2016, FMCs’ profits will be hard to maintain under current volatile market conditions,” Hui said.