(Yicai) Dec. 28 -- International mutual funds and wealth managers have shifted their focus to bonds on the Chinese mainland this year in search of stable returns as investor sentiment cools on the stock markets.

The US’ Neuberger Berman is the largest overseas mutual fund on the mainland with CNY10 billion (USD1.4 billion) worth of funds under management, most of which are bonds, according to incomplete statistics.

The US’ BlackRock has almost CNY7 billion (USD1 billion) worth of funds under management, half of which are stocks and half are bonds. And the UK’s Schroders, which has just issued its first fund on the Chinese market, has only CNY1 billion under management.

Foreign mutual funds seeking to sell wealth management products to investors who wish to boost their retirement savings need to reach a certain scale. So they are issuing bond after bond, especially at the end of year in order to  quickly expand their business scale.

But overseas wealth managers are being boosted by the sales of their Chinese joint venture partners. As of last month, Amundi BOC Wealth Management had a scale of CNY27.2 billion (USD3.8 billion), while that of BlackRock CCB Wealth and Schroders BOCOM Wealth reached CNY11.4 billion (USD1.6 billion) and CNY9.9 billion, respectively.

Amundi BOC Wealth Management, which was the first of the three to start business, saw its assets under management top CNY70 billion (USD9.8 billion) last year, but this now stands at less than CNY30 billion, due to the dismal performance of the stock and bond markets since late 2022.

BlackRock CCB Wealth Management, which managed CNY10 billion (USD1.4 billion) of assets as of the second quarter, was mainly focused on issuing equities after its launch in 2021. But since Fan Hua became general manager in 2023, fixed-income and pure-debt funds have become its main products.

Since September, short-term interest rates for bonds have risen faster than that of longer term ones mainly due to monetary easing and because the increased supply of bonds has given rise to a long-term outlook on the bond market, Liu Rui, BlackRock CCB Wealth’s incoming chief multi-assets investment officer, told Yicai.

There have been plenty of price adjustments for short and medium-term products and the risk of future corrections are relatively controllable, Liu said. In terms of the stock markets, fears of more interest rate hikes overseas and increased geopolitical risks are on the wane, and investors’ appetite for risk is expected to slowly increase.

Editors: Liao Shumin, Kim Taylor