(China Alert) FMC non-core business: The other side of the coin

·FMC non-core business makes up RMB10.2tr of China’s MF industry
·FMC subsidiary and parent SA business is opaque and largely misunderstood
·Foreign firms (particularly JV partners) need to understand this space

Update: The majority of the almost RMB17tr (USD2.7tr) Chinese fund management industry remains veiled and misunderstood. Fund management company (FMC) non-core (i.e. not public mutual fund) business makes up RMB10.2tr (USD1.6tr) in assets and this pool is rapidly growing. In contrast to the public mutual fund sector in Q3, non-core AUM continued to grow almost unaffected by market volatility. Non-core business is now so critical that AMAC has begun to regularly monitor its growth, but it remains more complex than these simple numbers. Global managers with stakes in mainland JV FMCs should be acutely aware of any non-core operations that its partner is undertaking, or, at the very least, have an understanding of the space. Welcome to Z-Ben Advisors’ non-core 101.

FMC business is split into two distinct segments: core and non-core. Core business is the very visible public mutual fund business which remains familiar to the vast majority of industry participants. Non-core business is another matter entirely. A further split divides the non-core component into……

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