Fidelity Takes a Step into China’s Growing Retirement Market
Fidelity International, one of the world’s largest pension managers, has taken a significant step into China’s growing retirement market by setting up its first multi-asset public fund of funds. This move is aimed at tapping into the growing demand for retirement solutions as China’s population ages.
A Growing Demand for Retirement Solutions
China’s pension system is facing an imminent funding shortage due to its aging population and low birth rates. The government has introduced measures to support retirement finance, including adding more institutions to the basic pension plan. This plan, known as the "first pillar," has over 7 trillion yuan in savings.
Fidelity’s Entry into the Chinese Market
Fidelity’s Shanghai-based unit has set up a new fund that caters to investors seeking stable returns for retirement. This fund is based on a strategy that can produce products eligible for China’s individual pension plan once regulatory permission is granted. The fund has already raised 867 million yuan (S$162 million) in just eight days from public individual investors and Fidelity has cut short the launch period after reaching its target early.
Challenges Ahead
While Fidelity’s new fund has received strong investor demand, there are still challenges ahead. More than 70% of participants in the individual pension plan want their money to be locked up for no more than three years, reflecting weak commitment to long-term investments. Additionally, there is a risk of disappointing investment performance, which could hurt investor interest.
Blazing a Trail for a Multi-Asset Approach
Despite these challenges, Fidelity is confident in its new strategy and believes it can blaze a trail for a multi-asset approach in China. The company is eyeing the potential stemming from China’s efforts to boost all three underfunded pillars of its retirement savings system.
Conclusion
Fidelity’s entry into China’s retirement market is a significant step in the company’s global expansion strategy. With its expertise in pension management and strong investor demand, Fidelity is well-positioned to capitalize on China’s growing retirement market.
FAQs
Q: What is Fidelity’s new fund of funds?
A: Fidelity’s new fund of funds is a multi-asset public fund that caters to investors seeking stable returns for retirement.
Q: How much did the fund raise in its initial launch period?
A: The fund raised 867 million yuan (S$162 million) in just eight days, exceeding its target and prompting Fidelity to cut short the launch period.
Q: What is the goal of Fidelity’s new strategy in China?
A: The goal is to tap into China’s growing retirement market and provide investors with stable returns for retirement.
Q: What are the challenges facing Fidelity in China’s retirement market?
A: Fidelity faces challenges such as weak investor commitment to long-term investments and the risk of disappointing investment performance.
