Asiamoney China's Best Wealth Managers 2017
Independent wealth management firms have sprung up in China in recent years to serve the fast-expanding wealthy population. While many of them are young with a limited product range and no proven expertise, a small handful have stood out in serving clients with a wide array of product offerings and a track record of generating steady investment returns.
Wealth management firm of the year: CreditEase
CreditEase set itself further apart from its domestic peers in 2016 with its remarkable success in sustaining robust business growth, the outstanding performance of its product offerings and its leadership in exploring advanced technologies to develop innovative products.
In the last five years, CreditEase’s assets under management (AuM) have maintained an annual growth rate of 50%. In 2016, it recorded a 30% increase in the number of clients. During the year, 24% of the firm’s clients made additional investments in its wealth management products. Last year, its AuM overseas and AuM in fund of funds (FoFs) also surged 60% and 90% year on year respectively. As a result, its combined AuM exceeded Rmb250 billion ($36.4 billion) by the end of 2016.
The firm’s main wealth management products posted impressive results last year: the average annualized return of its private equity funds and real estate investment funds was between 10% and 20%; at the end of 2016, 37% of its private equity products started distributing cash returns to investors one year after inception; throughout 2016, 79% of its capital market FoFs generated positive yields, while only 32% of private stock investment funds in the market did so.
CreditEase, under founder and CEO Ning Tang, continues to lead its peers in using modern technologies to provide better service for its wealth management clients. Last year, it launched a robo-adviser platform to help mass affluent clients find the most suitable asset allocation choices and enable them to track and rebalance their portfolios in real time to optimize returns.
The firm also rolled out a smart insurance platform, which uses big-data analytic tools that immediately construct and recommend comprehensive insurance plans for clients after they submit information via their mobile phones. It also allows clients to track the performance of loans offered to needy people by applying blockchain technology in philanthropic financing.
Best wealth manager for high-net-worth individuals: Noah
Noah Holdings, founded in 2005 in Shanghai, is one of China’s first independent wealth management firms. It is also the first to go public overseas – it launched an IPO on the New York Stock Exchange in 2010. Noah has built unrivalled strength in serving high net-worth clients in China.
It had more than 135,000 HNW clients and managed assets worth Rmb380.8 billion ($55.4 billion) by the end of 2016, making it by far the largest independent wealth management firm in China. And these results were achieved on the back of the huge investment the firm has made in manpower, its business network and proprietary WM capability.
Among independent WM firms, Noah operates the most extensive business network in China. At the end of 2016, it had 1,169 professionals serving clients from 185 outlets in 71 domestic cities. Its business network now covers all the top-tier cities, provincial capitals and other cities in economically developed regions in China, such as east China’s Yangtze river delta and south China’s Pearl river delta where HNW populations are concentrated.
Noah has established a rigorous mechanism to screen WM products and manage associated risks for clients. When selecting products, its team looks for the best choices for customers by considering the risks, returns and liquidity of WM products. Each year, the team screens more than 2,000 WM products. But after a series of studies and assessments, they recommend less than 5% of the products to clients.
Nearly all of the independent WM firms in China started out as sales agencies for other companies’ products. But as competition increased, the way for these firms to get ahead was to develop and manage their own products. Noah is clearly aware of this. In 2010 it set up a subsidiary, Gopher Asset Management, to strengthen its proprietary asset management capability.
Gopher has become a leading alternative asset manager in China, managing private equity, real estate, secondary market and other investments denominated in both renminbi and foreign currencies.
Best wealth manager for overseas asset management: Noah
In the decade after Noah Holdings’ inception, China’s real estate market was red hot. The firm achieved explosive business growth thanks to demand for its property-related trust products. In recent years, it has not only widened the industry coverage of its wealth management products in China, but also led its peers in exploring asset management opportunities overseas.
Noah, under president Kenny Lam, has stepped up its efforts in establishing an extensive business network and securing business licences overseas in the last four years.
It was granted licences by Hong Kong’s securities regulator for securities trading and asset management in 2012, and the following year it set up a financial advisory subsidiary in Taiwan to help local high net-worth individuals and institutional clients to invest in offshore renminbi-denominated assets.
In 2014, it became the first independent Chinese WM firm to open a trust subsidiary in Hong Kong to provide services such as the management of foundations and offshore businesses, family offices, immigration services and tax planning. In the same year, it also incorporated an insurance brokerage in Hong Kong to expand its range of services for HNW clients.
Noah opened its international business unit, Noah Holdings International, in Hong Kong in 2015 to oversee its rapidly expanding international operations. While tapping the abundant business opportunities and expertise of the local talent pool in Hong Kong, Noah has been expanding its overseas business network in other markets.
Last year it became the first independent Chinese WM firm to operate in an offshore market after it was granted a licence for trust management in Jersey, the offshore financial centre in the Channel Islands. In March 2017, it opened a subsidiary in Silicon Valley in California.
In the last two years, the firm has also partnered with several of the world’s top-tier private equity and asset investment firms including Blackstone, Carlyle Group, Oaktree Capital Management, Kohlberg Kravis Roberts, Texas Pacific Group, McKinley Capital and Bain Capital to invest assets for its clients.
All this has laid a solid ground for the sustainable growth of Noah’s overseas asset management business. By the end of 2016, the firm’s overseas assets under management reached Rmb16.9 billion ($2.5 billion), up 32% from a year earlier.
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