(Bloomberg) - Invesco Ltd. is boosting its headcount in China after hitting an asset management target two years earlier than expected, as it seeks to secure further growth in the nation’s expanding mutual fund market.
Assets under management for Chinese clients jumped more than 40% last year to $112 billion as of Dec. 31, exceeding the $100 billion mark the Atlanta-based company expected to reach by the end of 2023, according to Andrew Lo, head of Asia Pacific. The firm plans to hire “a few dozen staff across functions including investment teams” this year for its joint venture mutual fund business, which contributed the most assets, he said.
Global asset managers are stepping up their presence in China as authorities open up the industry to more foreign competition. BlackRock Inc., which became the first overseas firm with a wholly owned mutual fund business last year, has started launching new products, while Fidelity and Neuberger Berman have won approvals to prepare for such units.
“We want to continue to expand our investment capabilities because as we look ahead in China we see opportunities in pension, in cross-border investments, in ESG, and in continued market opening up and liberalization,” Lo said in an interview by phone from Hong Kong. “We want to catch up with our growth and position for growth.”
Invesco’s solid long-term inflows, with “notable strength” in China and exchange-traded funds, are a core indicator of business health even as fee margin pressures will further weigh in the first quarter, Bloomberg Intelligence analysts Alison Williams and Neil Sipes wrote in a Jan. 26 note, after the company reported fourth-quarter earnings.
China’s mutual fund market rose by 27% to 25.3 trillion yuan ($4 trillion) as of Nov. 30, the latest official data show. Fund launches jumped by 32% to a record 1,906 in 2021, according to China Galaxy Securities Co. data, even as demand waned later in the year when volatility rose.
Invesco Great Wall Fund Management, the local joint venture, recorded $27.5 billion in mutual fund inflows last year, including $12.1 billion in 33 new launches, according to company data. Invesco and the joint venture had just over 350 full-time employees in mainland China at the end of December.
While China’s new fund launches have cooled this year as local stocks fall into a bear market, the mutual fund industry is still drawing inflows into fixed-income and balanced products thanks to a low penetration ratio and a shift of wealth into the capital market, Lo said. “I continue to think it’s a very exciting market and a big opportunity to us.”
Boost Ownership
The company is still in talks to boost its ownership in the joint venture from 49% to 51% and its local partner has given positive signals, he said, adding that it’s a “matter of working through timing wise.” Although Invesco doesn’t have full ownership control like some foreign rivals, it’s been managing the business and has “unique” advantages stemming from its global mentality and understanding of the local market, he added.
Invesco isn’t setting a new short-term target for assets after hitting $100 billion, but is focused on expanding its capabilities for new businesses ranging from retirement funds, fund of funds and ETFs to investment advisory, Lo said.
“The thing to do is really position to build out those capabilities,” he said. “And the rest will take care of itself.”
By Bloomberg News
