More Funds Selected as NSSF Investment Managers

After six years of suspension, China's National Social Security Fund (NSSF) has selected seven fund management institutions as the domestic investment managers, thus adding the number of such funds up to 16.

This time, NSSF requires that the participants in the selection shall have assets management size of not less than CNY 20 billion by the end of this September and shall have the net assets of not less than CNY 100 million at any time. 23 fund firms are thus qualified to take part in the selection of NSSF's investment managers.

The seven winners include Dacheng Fund Management Co., Fullgoal Fund Management Co., ICBC Credit Suisse Asset Management Co., GF Fund Management Co., HFT Investment Management Co., China Universal Asset Management Co. and Yinhua Fund Management. After becoming the domestic investment managers of NSSF, they can pave the way for entering the pension market in the future.

Actually, it is not a profitable business for these fund firms to act as the investment managers of NSSF. They are understood to make preparation for the future pension management business. On the one hand, the pension investment can bring stable returns; and on the other hand, such returns on investment are long-term yields instead of short-term yields.

By the yearend of 2009, the combined scale of China's pension market stood at CNY 2.25 trillion, accounting for 6.62% of the gross domestic products in the year, far lower than the average level of between 40% and 50% in those developed nations.

In 2002 and 2004, actually, NSSF had conducted such selection of domestic investment managers; funds like Harvest Fund Management Co., China Southern Fund, China Asset Management Co., Bosera Asset Management Co., and one securities broker China International Capital Corporation were eventually selected by NSSF. Industry insiders disclosed that the market value of NSSF's entrusted investment is CNY 302.4 billion currently, accounting for 44% of the Fund's total assets; and the investment portfolios include stock-oriented products, bond-oriented products and hybrid products.

With a size of about USD 120 billion, NSSF can have up to 20% of the capital for overseas investment and about 7% of such available capital has already been used to make such investment. In the future, there will still be CNY 91 billion for the Fund to make the overseas investment; and the fund of funds and direct equity investment will be the major targets then.