05/07/18

ASIA: Hedge funds Bridgewater and Winton get the nod in China

(Financial News) -- Quantitative giants are the latest to win full onshore approval for their local subsidiaries

Two of the world’s largest and most successful quantitative hedge funds have won approval to launch domestic funds in China, becoming the latest in a steady stream of western firms to gain onshore status in the vast and fast-growing market.

Winton, with $30bn under management, and Bridgewater Associates, the $160bn US firm often referred to as the world’s largest hedge fund, have both been granted authorisation from the Asset Management Association of China, an organisation that combines the roles of trade body and semi-official regulator.

The permit grants approval to manage institutional funds onshore, and is seen as the final step in establishing full-service subsidiaries in the Chinese market, which has opened up considerably to foreign money managers in recent years.

More recently, Chinese regulators have embarked on a round of rule-tightening aimed at improving standards in the industry, which has slowed its growth. But analysts expect this to be positive in the long term.

Both Bridgewater and Winton have been active in the Chinese market for some time, operating under more restricted licenses that allow them to manage money for Chinese investors abroad.

The quant funds now join the likes of Fidelity, BlackRock, Invesco, Man Group and Aberdeen Standard Investments with an onshore presence.

Both Qiaoshui Asset Management, Bridgewater’s local subsidiary, and Yuansheng Asset Management, Winton’s, are “wholly foreign-owned enterprises”, the Chinese regulatory term for 100% subsidiaries of foreign firms.

These were only permitted in 2015; previously, western financial firms had to establish joint ventures with local players in which they were not permitted to own more than 49%.