BlackRock raises $1BN for its maiden Chinese market fund

BlackRock’s China mutual fund subsidiary has set up its first fund in the country after raising 6.68 billion yuan ($1.03bn) during a shortened subscription period, signalling a warm reception by investors.

Wednesday’s disclosure came a day after billionaire investor George Soros said it was a mistake for BlackRock to invest in China now, and likely to lose money for the US fund giant’s clients.

BlackRock, the first foreign asset manager to operate a wholly owned business in China’s $3.6 trillion mutual fund industry, said its newly launched China equity fund had raised 6.68 billion yuan ($1.03bn) from more than 111,000 investors.

The BlackRock China New Horizon Mixed Securities Investment Fund, launched on August 30, stopped taking new subscriptions on September 3, a week earlier than planned.

“We are very proud of achieving this milestone for our China fund management business, and are grateful for investors’ overwhelming support,” Rachel Lord, BlackRock’s chair and head of Asia Pacific, said in a statement.

The fundraising by the world’s biggest asset manager is being closely watched as more global players prepare to enter China’s fast-growing, but highly competitive mutual fund market.

Fidelity International is setting up its mutual fund subsidiary in China, while Neuberger Berman, Schroders PLC and VanEck have also applied to set up China units to sell retail funds. Beijing scrapped a foreign ownership cap in the sector on April 1, 2020.

Strong year

Writing in the Wall Street Journal on Tuesday, Soros had called BlackRock’s investment in China a tragic mistake that would damage the national security interests of the United States and other democracies.

While BlackRock faces a challenge appealing to yield-hungry Chinese retail investors in a crowded industry dominated by local firms, it is tapping the market in one of its strongest years. New mutual funds have raised more than 2 trillion yuan ($309.4bn) this year through August, already the second highest annual amount ever, only trailing last year’s record 3.1 trillion yuan ($479.5bn).

BlackRock has been issuing mutual fund products with Bank of China Investment Management, which it has held a stake in since 2006. The company also tested the waters a few years ago with a private securities fund business, which ceased operations after it won the mutual fund licence as required under Chinese rules.

On Wednesday, Chi Zhang, general manager of Shanghai-based BlackRock Fund Management Co, said the asset manager was committed to bringing long-term investment opportunities for Chinese investors, leveraging its track record in investing in China A-shares and its expertise.