TOBAM, China Asset Management to partner on A-shares fund

TOBAM and China Asset Management Co. announced a strategic partnership to develop a strategy focused on mainland listed A shares for institutional investors in China and overseas.

The strategy will be based on TOBAM's "maximum diversification" approach, which aims to avoid the risk biases of traditional market-cap-weighted indexes, while leveraging China Asset Management's "expertise and privileged access to the Chinese A-shares equity markets," a joint news release said Wednesday.

Yves Choueifaty, CEO of TOBAM, said in a telephone interview that a growing number of big, sophisticated institutional investors around the globe are interested now in gaining exposure to mainland-listed shares, and with better diversification than market-cap-weighted indexes provide.

Mr. Choueifaty said China Asset Management will be the fund's manager, and take 100% of the management fees, while paying a licensing fee for the use of TOBAM's technology. He said the fee would be somewhere between 10 and 25 basis points.

Xiaodong Tang, CEO of China Asset Management, said in the release that his company — spurred by the interest of Chinese clients — has been keen to develop smart beta strategies for the Chinese market. Collaborating with TOBAM will allow China Asset Management to offer those investors a unique investment strategy, he said.

Mr. Choueifaty said the partnership is targeting "very large institutional investors" around the world.

He said 56% of TOBAM's clients, at present, are large public or sovereign investors, including central banks and public pension funds, with corporate pensions accounting for 32%. Wealth managers, insurance companies, fund of funds and banks accounting for the remainder.

China Asset Management has $153 billion in assets under management, while TOBAM, a Paris-based quantitative boutique manager, has $9.5 billion in AUM.