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Pictet AM takes first physical steps into mainland China

Shanghai Lujiazui civic landscape of China national flags.

Pictet Asset Management, the asset management arm of Geneva-based Pictet Group, has opened a wholly foreign-owned enterprise (WFOE) in Shanghai.

The office initially comprises a small team of compliance and client services staff, and is headed by general manager Penny Chen, a spokeswoman told our sister publication Fund Selector Asia.

Upon registration with the Asset Management Association of China (AMAC), the Shanghai WFOE will be allowed to to raise funds from domestic mainland investors to invest in the firm’s offshore strategies under the Qualified Domestic Limited Partners (QDLP) programme.

The spokeswoman could not comment on the size of QDLP quota that Pictet AM expects to receive, nor the likely timing of a QDLP product launch.

“We are looking at various alternative strategies [for our first product] and will announce in due course,” she added.

Competition hotting up

Other firms that received the QDLP qualification this year include Franklin Templeton and UBP.

Foreign asset managers that are expected to launch QDLP products this year include Neuberger BermanOaktree CapitalEastspring Investments and Allianz Global Investors.

Pictet AM’s establishment of an onshore presence in mainland China complements several of its other China ventures.

The firm invests onshore for its global clients through the qualified foreign institutional investor (QFII) programme, Shanghai-Hong Kong Stock Connect, Bond Connect and China Interbank Bond Market (CIBM) Direct Access.

It also partners with mainland commercial banks under the qualified domestic institutional investor (QDII) scheme to provide institutional and qualified individual onshore investors access to offshore markets.

Most recently, in July this year, Pictet AM launched its first northbound fund — Pictet Strategic Income Fund — under the Mutual Recognition of Funds scheme.

“We will begin our China onshore operation with a focus on cross-border investment before gradually developing local investment capabilities,” said Junjie Watkins, Pictet AM’s chief executive for Asia ex-Japan.

Just the beginning?

The spokeswoman could not confirm whether Pictet AM intends to apply for other licences, such as the private fund management (PFM) and public mutual fund licences, which would allow the firm to offer onshore products to wealthy and retail domestic investors, respectively.

Around 30 foreign asset managers have been granted PFM licences, with almost 100 PFM products approved by the AMAC, its records show.

“We devise our strategy according to the needs of the firm and its clients,” said the Pictet AM spokeswoman.

Headquartered in Geneva, Pictet AM employs around 4,800 people in 30 offices worldwide and had $589bn (€497bn) in AUM or custody as at 30 June 2020.

“We are encouraged by the prospect of the country’s asset management industry, which has developed into one of the world’s biggest and fastest-growing, thanks to China’s economic strength and its rate of capital accumulation,” said Renaud de Planta, senior partner of the Pictet Group.

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