Global asset manager Schroders is planning to exit the competitive Chinese mutual fund market, marking a significant shift in its strategy for the region. The firm intends to sell its stake in its onshore mutual fund joint venture, Schroders Fund Management (China) Co., Ltd., to its partner, Bank of Communications (BoCom).
Key Takeaways
- Schroders plans to sell its stake in its Chinese mutual fund joint venture.
- The move signals a strategic re-evaluation of its presence in the Chinese asset management sector.
- The firm will continue to operate its wealth management and institutional businesses in China.
Strategic Shift in China
Schroders has decided to withdraw from the mainland China mutual fund business, a sector that has become increasingly crowded and challenging. The company is reportedly in talks to sell its 51 per cent stake in the joint venture to BoCom, its partner in the business. This decision comes after Schroders acquired the remaining stake in the venture from BoCom in 2019, taking full control.
The move reflects a broader trend of foreign asset managers reassessing their strategies in China, where competition from domestic players and other international firms is intense. The mutual fund industry, in particular, requires significant scale and local market expertise to thrive.
Continued Presence in Other Segments
Despite the planned exit from the mutual fund sector, Schroders intends to maintain its presence in other areas of the Chinese market. The firm will continue to operate its wealth management business and serve its institutional clients. This suggests a strategic focus on segments where it believes it can achieve greater success and profitability.
Schroders has been active in China for over two decades, initially establishing a presence in the market through its wholly-owned subsidiary, Schroders (China) Limited, which focuses on private fund management and serves institutional investors. The mutual fund joint venture was established later to tap into the retail market.
The sale of the mutual fund stake is subject to regulatory approvals and is expected to be completed in the coming months. The firm has not disclosed the financial terms of the potential deal.
