Eastmoney Information, parent of China’s biggest online fund distributor Tiantian Fund Sales, is awaiting approval to set up a mutual fund house in a move that would make it the first company of its type to do so.
The asset manager will be wholly-owned and called Tiantian Fund Management. Shanghai-based Eastmoney plans to use its digital platform to sell products from Tiantian that are different from traditional mutual funds.
The application was accepted by the China Securities Regulatory Commission (CSRC) on November 17, according to a filing released this week. The typical approval period is six months, but some approvals have taken nearly a year to come through so far.
Eastmoney is the first online distributor to seek to enter the mutual fund industry. Some independent financial advisers have expanded into product manufacturing, but only in the private fund segment so far. For example, Shanghai-based Noah Holdings established a private fund company, Gopher Asset Management, in 2010.
Private fund companies, including Hillhouse Capital, Hony Capital and VStone, are also seeking CSRC approval to set up mutual fund companies this year.
Eastmoney is optimistic about the potential growth of the mainland fund industry, as household savings are increasingly moving into financial investments, and is particularly bullish on internet finance. The company did not respond to requests for comment for this article.
Holding a mutual fund licence will push Eastmoney "higher in the value chain", said Shanghai-based research house Red Pulse. It noted that Alibaba's online financial services unit Ant Financial had demonstrated this through its successful partnership with Tianhong Asset Management.
Ivan Shi, research director at Shanghai-based Z-Ben Advisors, said: “It is difficult for new fund companies to grow, but there are opportunities. If a new fund company can efficiently offer products – especially equity, balanced and bond funds – it can grow its assets quickly.”
Shi cited as an example Shenzhen-based First Seafront Fund, which launched in January 2013 and had raised Rmb20.7 billion ($3.2 billion) as of September this year.
Eastmoney has a substantial base to work from. Qi Shi, chairman and chief executive, said this month that Tiantian Fund Sales accounted for 90% of mainland mutual fund sales by online third-party platforms. There are 71 independent third-party sales firms in China that distribute both mutual and private funds.
Tiantian Fund Sales generated an income of Rmb372 million in the first six months of this year, accounting for 61% of the parent company’s total income as of June. And it recorded 39.7 million transactions, amounting to sales volume of Rmb617 billion, in the first nine months of this year.