CreditEase
CreditEase has led domestic wealth management firms in the roll out of fund of funds products across a wide range of asset classes, from private equity and public equity to real estate. Its FoF products stand out thanks to their record of delivering steady returns for investors.
CreditEase is one of the first Chinese financial institutions to invest in alternative assets via FoFs. Its private equity FoFs have recorded robust growth, with assets under management exceeding Rmb20 billion ($3.1 billion) by the end of 2017. Through private equity FoFs, the firm has invested in more than 200 industry-leading funds inside and outside China, covering high-growth sectors including TMT, consumer, advanced manufacturing, healthcare, energy conservation and environmental protection.
Thanks to diversified asset allocation, up to 90% of the firm’s private equity FoF products started cash distribution in the first year after inception. By contrast, the average time span between fund inception and the first distribution in the Chinese private equity industry is between 2.5 to 3 years.
In 2017, CreditEase’s public equity FoF products – which invest in publicly traded securities – also showed impressive results. Up to 90% of its public equity FoFs generated positive yields, versus 61% among private funds investing in public equities in the broader market.
CreditEase’s real estate FoFs fall under the opportunistic, income and debt categories and invest in offices, residential buildings, retail and hotel properties in the US, Europe and Asia Pacific. Such a cross-region and multi-pronged asset allocation approach diversifies risks from economic or political turbulence in a single region or from the underperformance of a single project. This ensures steady AuM growth and outperformance of its real estate FoFs.
By the end of 2017, the AuM of CreditEase’s real estate FoFs and funds reached Rmb12.5 billion. The internal rate of return of the firm’s opportunistic real estate FoF series ranges from 15% to 18%, while that of its income real estate FoF series ranges from 7.7% to 11.8%.