Schroders is withdrawing from its wholly owned fund operation in China and has agreed to transfer its products to Neuberger Berman.
In a statement to Private Banker International, the company confirmed it has reached an agreement on the proposed transfer of three funds – Schroder Heng Xiang Bond Fund, Schroder China Dynamic Equity Fund, and Schroder Tian Yuen Bond Fund.
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Schroders noted the move is part of its three-year “transformation” programme, which prioritises areas with “competitive edge”.
However, the company said it remains “fully committed” to China and emphasised its “continued confidence” in the market.
“This change applies solely to our wholly owned fund management company in China,” the statement read.
The development, first reported by Reuters, follows shareholder approval last month for the £9.9bn ($13.2bn) sale of Schroders to US firm Nuveen, a transaction set to combine the two groups into one of the largest active fund managers globally.
Schroders is also seeking interest in the licence held by the China fund unit, the news agency said citing two unnamed sources.
Such a licence would enable a buyer to begin operating an entirely owned fund business in China without delay. They added that South Korea’s Mirae Asset Financial Group is among the parties in discussions.
Schroders received approval from Chinese regulators in January 2023 to establish the wholly owned mutual fund business, as Beijing moved faster to open its financial industry to overseas firms.
As of the end of March, the unit managed 1.7bn yuan ($249.89m) in mutual fund assets, based on its latest filings. That compares with $1.1tn in assets managed globally by the parent company.
Sources told Reuters the withdrawal will not affect Schroders’ other two ventures in China: a wealth management business controlled by Schroders alongside state-owned Bank of Communications, and Bank of Communications Schroders Fund Management, in which it holds a minority stake.
China began allowing foreign groups in 2020 to operate fully owned fund management businesses in the domestic market, opening the way for firms such as BlackRock and Fidelity International. Schroders is the first foreign manager to leave after setting up such a business.
