State Street Global Advisors (SSgA) is moving to strengthen its investment capabilities across Asia Pacific including in China, where it is recruiting for its freshly minted joint venture.
The US house, roughly 90% of whose assets are invested passively, has joined forces with Zhongrong International Trust, which boasts a strong distribution presence in wealth management products.
The venture has been titled SSgA Fund, despite the fact that the US firm will be the minority shareholder with the maximum 49% equity holding allowed. Zhongrong holds 51%.
SSgA will co-manage the venture, which was anointed as China’s 81st asset management company yesterday when the China Securities Regulatory Commission updated its list of fund firms. The application was submitted last December and business licence approved on May 31.
The JV is Beijing-based with a registered capital of Rmb300 milion ($49 million). It can launch and sell investment funds and engage in asset management and segregated account business.
The general manager of SSGA Fund is Li Xuesong, who previously served as deputy general manager at Bosera Funds.
SSgA will focus on fixed income products and structured products in the initial phase, and will also a start segregated account business, according to Chinese media reports.
Ting Li, head of Asia ex-Japan for SSgA, tells AsianInvestor that the venture will have about 50 staff in all, including 20 investment professionals.
“We want to recruit from the best in the market, and we will look to launch mutual fund products,” she says, noting that it will produce funds for the local marketplace.
She notes that SSgA is eager to avoid what it sees as some of the mistakes that other fund companies have made in China, particularly by concentrating only on mutual funds. “There is a huge population of wealth management products, and we want to build our brand there [in China].”
Li argues it will be pension reform that will drive growth in China’s funds market. “We are better at managing pension assets, and this is one of the reasons we are entering China,” she says.
On the prospect of launching on-the-ground presences elsewhere in Asia, Li is sanguine. “We have representative offices in Korea and Taiwan and we have no plans to open any other offices in Asia at present.
“But we realise that Asia as an investment destination is becoming more important. We are trying to strengthen our investment capabilities in this region, both in fixed income and equities, adding investment personnel and product specialists.”
Overall SSgA is looking to add product development specialists on the ETF side. It has a regional active trading desk in Hong Kong as well as an active emerging market equity team and an active developed market investment team.
Further, it has a passive equity investing team in Hong Kong and fixed income personnel in Singapore. “Asia fixed income is very important,” says Li.
SSgA emerged as the fund firm most heavily invested in Asia Pacific in absolute terms with $302 billion, or just over 14% of its global asset base. To see our list of the top 100 fund firms by assets invested into the region, see AsianInvestor’s June 2013 magazine issue.