China opening up to private management services?

Bank of Communications Schroder Fund Management, the Schroders China fund joint venture, said it signed an agreement with a private Shanghai enterprise to manage close to 100 mln yuan worth of assets.

The private-wealth account is the first to be managed by an asset management firm in China.
The joint venture did not name the private enterprise.

The announcement follows the launch by the China Securities Regulatory Commission (CSRC) of new rules from January 1 this year allowing fund management companies to provide wealth management services to institutional investors.

The funds were also allowed to offer services to individual clients who can invest at least 50 mln yuan.

Bank of Communications Schroder Fund Management won approval to offer such services on Feb 26.

So far, the CSRC has given permission to a total of 23 Chinese mutual fund companies to offer private wealth management services, allowing them to invest in stocks, bonds, stock funds, central bank bills, short-term debt, asset-backed securities and other regulated products.

Will more firms be given permission to offer such services in the short term?

Will investors be attracted to Vietnamese Real Estate Investment Fund?

Japan Asia Securities plans to sell from mid-April what it claims to be Japan's first publicly traded investment trust fund products that invest in planned real estate development projects in Vietnam, informed sources said.

The Tokyo-based brokerage house expects brisk demand for investment in Vietnam, which is regarded as a promising emerging economy following the so-called BRIC economies of Brazil, Russia, India and China.

A Hong Kong firm will undertake management of the investment trust fund with advice from a Japanese real estate company that has ties with some Vietnamese firms.

A minimum investment amount is expected to be set at one million yen, with an investment period of three years, which may be extended by two years.

On the back of an inflow of overseas capital, demand for the development of real estate such as hotels, offices and housing is increasing rapidly in Vietnam, according to the sources.

Japan Asia Securities plans to attract investors through its Vietnam investment seminars and Internet advertising.

Does Japan Asia’s move show that the foreign investment flow into Vietnam is set to continue?

Will allotting options allow Lotus MF to retain employees?

With high levels of attrition plaguing the mutual fund industry, AMCs are increasingly offering Esops to retain talent. Lotus Mutual Fund is the latest to join the race.

UTI Mutual Fund recently announced plans to go public and allotted stock options to its employees. Lotus Mutual Fund has become the second fund house to take the same route.

Experts reckon that Esop culture is not new in the fund industry. Kothari Pioneer (the erstwhile Franklin Templeton), had diluted 4.5 per cent stake in favour of its employees, in the 90s.

Lotus Mutual Fund has diluted a 19 per cent stake in favour of 180 odd employees. The fund house does not have any immediate plans for an initial public offer, but has not ruled out an IPO after 3-5 years.

Ajay Bagga, CEO, Lotus India AMC, said, “When major fund houses would have listed five years down the line, these shares would become more valuable as we are a fast growing company.” The fund house has a net worth of Rs 92 crore and AUM exceeding 10,000 crores.

Fund houses have been luring talent with various promotional offers and perks, but to no avail. The employees of Standard Chartered fund were promised hefty bonuses provided they remained with the company for at least two years.

While Indian AMCs may not give Esops, their parent companies have this policy, according to the market watchers.

In a constantly evolving industry where new foreign fund houses set up bases everyday, it is not hard to imagine why people are moving.

Recently, Morgan Stanley Mutual Fund attracted Jayesh Gandhi and Navneet Munot from Birla Sun Life Mutual Fund. Prateek Aggarwal from ABN Amro Mutual fund moved to the yet-to-be launched Bharti Axa Mutual Fund. Similarly, Suyash Chaudhary from Standard Chartered Mutual Fund migrated to a fund house.

CEOs are not far behind. Sandeep Dasgupta left Deutsche Mutual Fund to join Bharti Axa Investment Management. Arindam Ghosh, who was with Fidelity’s Asia Pacific business team recently took over as the CEO of South Korean mutual fund, Mirae Asset, which recently launched in India.

Even Pankaj Razdan, the star CEO at ICICI Prudential Mutual Fund joined Birla Group’s financial services arm as a deputy CEO. Some fund managers moved to private equity and hedge funds.

Will stock options be the trick that enables Lotus to lure high flying employees?