Top Biz News
Mutual funds ride GDP wave
By Karen Yip (China Daily)
Updated: 2010-01-26 08:03
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Mutual funds will be the key beneficiaries from both China's GDP growth and a rise in personal incomes over the next 10 years, as fund holdings make up an ever-larger percentage of household assets, said Michael McCormack, executive director at Z-Ben Advisors in Shanghai.
He said assets under management by China's mutual funds are projected to reach $1 trillion by 2014, propelled by sustained high savings rates, rapid economic growth and an increase in the working-age population.
The industry's assets under management may exceed $2.2 trillion by 2020 while qualified domestic institutional investors (QDIIs) will rise in volume to $120 billion by 2014, accounting for 13 percent of the industry's assets under management.
"Identifying areas with the greatest odds of fast growth is one of the key tasks of this report. Decisions about whether (and how much) to invest in China must be made by focusing on the exploitable opportunities, not the lure of generalized growth," McCormack said.
His assessment came following the release of China's 2020 fund industry report, which was commissioned by Z-Ben Advisors' clients contemplating strategic investments in the fast-growing funds industry.
The report extrapolated past trends, and in particular, China's boom-bust cycle, to gauge the near-term growth trajectory.
Over the past three years China has taken central stage as the most likely - and most coveted - source of fund management revenue and growth in the coming decade.
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The number of licensed-asset managers in China is expected to remain low, with perhaps 75 to 80 total by 2014, dramatically increasing the average assets under management and maintaining high levels of profitability, McCormack said.
More than 500 new product launches will be required to meet demand by 2014 and as such, greater diversity of product types are expected to emerge.
