Threefold growth for Chinese asset managers

It may come as no surprise that Asian asset managers fared a lot better than their European and US counterparts in terms of assets under management last year. Perhaps more startling is the rate of growth of China's investment management firms.

The assets managed by what were the three biggest Chinese investment managers four years ago had more than tripled to $54 billion by the end of 2008, according to financial consultancy Watson Wyatt.

Between 2005 and 2008, China Asset Management's AUM leapt to $30.8 billion from $5 billion, China Southern Fund's to $13.1 billion from $6.7 billion, and Hua An Fund Management to $10.1 billion from $5.6 billion. 

In the same period, the number of asset management firms from mainland China in the Pensions & Investments/Watson Wyatt World 500 ranking has risen to 13 from three, including two new entrants in 2008, China Galaxy Asset Management (with $7.6 billion in AUM) and China Universal Asset Management (with $7.5 billion).

The research shows that despite Chinese investment managers experiencing significant asset falls in 2008, some continued to move up the ranking. China Asset Management climbed to 216 from 244, Harvest Fund Management to 230 from 275 and Bosera Fund Management to 255 from 262. And China Asset Management moved up a massive 280 places.

Mark Brugner, Watson Wyatt's head of manager research for Asia, says: "2008 was a dreadful year for fund managers, with the majority posting record losses. However, our expectation is that assets raised by mainland China managers will increase this year, partly due to inflows from the emerging wealthy, particularly from the increasing number of billionaires, as well as from the various pension funds. It is also notable that many mainland China managers aspire to become global players, and their overseas expansion is also likely to further boost asset growth."

Other Asian firms also prospered relative to their European and US peers last year. Japanese fund managers preserved most of their assets during 2008, ending the year only slightly down with $4.3 trillion. This mirrors a trend for fund managers from emerging markets -- such as Brazil, China and India -- which have continued to grow and have more than doubled their share of the assets to around 4% over the past 10 years.

"While currency movements have played a role in these trends, generally those managers that had higher exposure to bonds are now better off," says Brugner. "Another trend of the past few years is a growing quality gap, with lower-performing managers struggling, particularly in alternatives. In addition, large, well-diversified managers with global offerings and established brands have continued to grow."

Globally, assets managed by the world's largest 500 fund managers fell by 23% in 2008 to $53.4 trillion, down from $69.4 trillion the year before. This fall is the first since 2002 and the biggest since the research began in 1996. The research also reveals that the top 20 managers accounted for a third of all losses ($5.6 trillion) in 2008, but their share of total assets in the research remained high, at 38%.

There are 10 US-based investment managers in the top 20, managing 51% of the total list's assets, while the other 10 are Europe-based. Of the top 500, North American managers' assets decreased by 24% to $23.9 trillion in 2008, remaining just ahead of European managers' assets, which fell by 25% to $22.7 trillion.

The research was conducted in conjunction with US investment newspaper Pensions & Investments.