By Stella Yifan Xie and Jing Yang 

BlackRock Inc. and Neuberger Berman are applying to manage and sell mutual funds in China, in what could be a watershed moment for a global investment industry eager to access the country's huge pool of individual investors.

BlackRock Financial Management and Neuberger Berman Investment Adviser LLC have applied to set up new firms for their planned mutual-fund businesses, notices on the China Securities Regulatory Commission's website showed on Wednesday.

Chinese authorities have previously said that starting Wednesday, foreign asset managers would be able to apply for mutual-fund licenses, as part of broader measures to further open its financial sector.

"We firmly believe that China is one of the biggest opportunities for BlackRock over the long term," Geraldine Buckingham, BlackRock's Asia Pacific head, said in a statement. The firm expects China's onshore market to see rapid growth in financial assets, she added.

Neuberger Berman said the application reflected its long-term commitment to building a full-service asset-management company in China. "We see China as a significant market opportunity," said Nick Hoar, the group's head of Asia Pacific.

Global asset managers are already allowed to offer private funds to rich individuals and institutions in China, managing onshore assets, while separate programs allow them to offer international investment products to some Chinese investors.

However foreign firms have until now been barred from China's fast-growing mutual-fund industry. Mutual funds in China can raise money publicly and have to follow more stringent investment and disclosure requirements than privately raised funds.

Both firms have already set up so-called wholly foreign-owned enterprises in China, as have more than 50 other foreign money managers since 2017. More than two dozen have obtained private-fund licenses to manage assets for high-net-worth individuals and institutions.

A spokeswoman for Fidelity International said it was also preparing a mutual-fund license application and considers China a critical, long-term market.

Traditional asset managers in China are likely to manage about 90 trillion yuan ($12.7 trillion) in assets by 2023, according to Oliver Wyman. As of November 2019, there were more than 120 Chinese mutual-fund managers, overseeing about 14 trillion yuan in assets, according to the Asset Management Association of China.

Separately, a Vanguard Group-backed venture is expected to roll out a mutual fund investment-advisory service on Thursday to more than 900 million users of Alipay, a popular mobile-payments platform owned by Jack Ma's Ant Financial Services Group. Vanguard, the world's second-largest asset manager behind BlackRock, will offer the service through a robo adviser joint venture with Ant.

China is gradually opening up its financial markets to international money managers and investment banks, partly due to yearslong prodding from the U.S. Last week, China allowed Goldman Sachs Group and Morgan Stanley to take control of their local securities units.

The securities regulator usually takes five working days to decide if it will accept license applications, or ask for more information. For other recent license approvals for similar matters, it has subsequently approved all of the applications it accepted, people familiar with the process said.

Write to Stella Yifan Xie at stella.xie@wsj.com and Jing Yang at Jing.Yang@wsj.com

 

(END) Dow Jones Newswires

April 01, 2020 07:50 ET (11:50 GMT)

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