·We believe ESOPs should gain traction in 2016
·This is a space with little precedent for foreign JV partners
·A miscalculated ESOP could cost foreign JV partners dearly

Update: Z-Ben Advisors believes China Universal’s recent announcement of an ESOP scheme may set the tone for a trend among FMCs in 2016. The immediate motivations for this are clear: difficulties in key staff retention have been one of the worst kept secrets in the mainland mutual fund industry. Private fund managers (Chinese hedge funds) have replaced insurers and brokerages as the primary destination for FMC manager defections. Perhaps more importantly, we believe the ramifications of this trend for foreign JV partners will go well beyond personnel stability. Any global firm holding a stake in a mainland FMC could encounter changes in both ownership and capital dynamics with their domestic partner in the near term.

The FMC industry as a whole has had to plug a continuous outflow of talent. The implementation of ESOP schemes has been ……

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