(China Alert) Chinese hedge funds: Back to the future

·PFMs are the fastest growing AM segment in China
·This growth is continuing despite volatility
·The PFM structure is being used by global managers for China access

Update: Private securities fund managers (PFMs), or China’s equivalent to western hedge funds, is the fastest growing asset management segment on the Mainland. However, it gets very little coverage despite having grown from relative obscurity to a trillion RMB industry within 18 months. PFM growth is attributed to a unique regulatory environment that falls under the Asset Management Association of China (AMAC) with CSRC keeping a watchful eye from afar. This has allowed PFMs to enjoy  flexibility unseen in other asset management segments. Consequently, PFMs have managed to shake up China’s other asset management sectors on all fronts including returns, talent and client targeting. What’s more, PFMs are setting the structural gold standard to manage money onshore and global managers are already positioning themselves to do so.  

Parallels can be drawn between the current PFM environment and US hedge funds in the 1970s……

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