Russell Investments' second stab at partnering with a Chinese money manager could leave the firm positioned to benefit from anticipated growth of demand on the mainland for local as well as global multiasset fund-of-funds strategies without the need of taking on the minority joint venture partner status of its first go-round.
On Dec. 6, roughly 18 months after Russell sold its 49% stake in a Shanghai-based fund management joint venture with Ping An Insurance Co., the Seattle-based multimanager veteran announced a cooperative tie-up with a top mainland manager, Beijing-based China Asset Management Co.
Peter Gunning, Russell's Sydney-based chief executive for the Asia-Pacific region, said the “cooperation” Russell and China AMC announced gives the companies “a very strong alignment of interests” to build the local fund of mutual funds strategies that Chinese regulators approved in September for retail investors.
Some industry watchers predict this type of targeted effort could become a template for more deals between Chinese and foreign managers in coming years, even as the number of joint ventures - long the only route for foreign firms looking to access local retail investors - looks set to dwindle.
With the opening of other routes into China's markets in recent years, even foreign firms in successful joint ventures will have to consider whether those ventures really fit into their broader global strategies, said Bonn Liu, a Hong Kong-based partner with KPMG and head of investment management for the firm's Asia-Pacific business.
If the foreign side of the JV equation has changed, the Chinese side has changed as well. Local managers have grown confident enough in their own capabilities to no longer reflexively feel the need to rely on foreign partners to teach them the fundamentals of the money management business, noted one Shanghai-based executive with a foreign money manager, who declined to be named.
Increasingly, those Chinese managers will look for foreign partners only when those partners can help them with some “very specialized niche product,” he said.