BlackRock Receives Nod to Start China Mutual Fund Business

BlackRock Inc. became the first foreign asset manager allowed to start a wholly owned mutual fund business in China, a step toward winning a slice of one of the fastest-growing wealth markets.

The world’s largest asset manager was granted a license from the China Securities Regulatory Commission to start selling onshore investment products and solutions to Chinese investors, the company said in a statement on Friday.

The approval comes a month after BlackRock was given the nod to pursue a joint venture asset management business along with China Construction Bank Corp. and Singapore’s Temasek. Together, the two entities give BlackRock an edge to reach more investors in China, as it competes with a slew of global institutions going after an asset pool estimated by Goldman Sachs Group Inc. to surpass $70 trillion by the end of the decade.

“China is taking significant steps in opening up its financial markets,” BlackRock Chief Executive Officer Larry Fink said in the statement. “We can support more Chinese investors access financial markets and build portfolios that can serve them throughout their lives.”

Read more about BlackRock’s China wealth joint venture

The string of approvals are a positive sign for other asset managers including Fidelity International Ltd. and Neuberger Berman Group LLC, which are still waiting for permission for their fully controlled operations in the country.

For BlackRock, being first “gives it a head start among global managers,” said Sun Guiping, an analyst with Shanghai Securities Co. The investment giant will also benefit China’s mutual fund industry by bringing in more product offerings and expertise, he said.

More wholly foreign-owned or controlled mutual fund firms will emerge as China’s opening up continues, Sun said. Their joint ventures already occupy 11 spots among the top 20 largest fund managers in China, excluding money-market funds, he added.

New York-based BlackRock’s strategy in China stands in stark contrast with Vanguard Group Inc., which ditched plans in March for a wholly owned mutual fund license. Vanguard is taking a different path by working with Ant Group Co. and building a robo advisory service.

Investable assets in China are set to surpass $70 trillion by 2030, with about 60% to be allocated to non-deposit products such as securities, mutual funds and wealth management products, according to Goldman Sachs research.

BlackRock oversaw more than $9 trillion globally as of March 31.

©2021 Bloomberg L.P.

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