China's $74 billion national pension fund is seeking asset management companies to help invest in global equity markets, according to its website.
The National Council for Social Security Fund (NSSF) may invest as much as $14.9 billion, or 20 percent of its assets, abroad, Beijing-based spokeswoman Zhao Hongtao said by telephone yesterday. Fund houses must have at least $5 billion or its equivalent in assets under management to receive a license, the pension fund said.
The pension fund is seeking higher returns to help extend coverage to more of China's 1.3 billion people. In November 2006, the NSSF appointed UBS AG and nine other fund managers to help invest overseas. NSSF plans to increase its $10 billion in international securities, Chairman Dai Xianglong said last month.
The NSSF is hiring fund houses to help manage investments in the MSCI China Index, MSCI All Country Asia Pacific ex-Japan Index, MSCI Emerging Market Index, MSCI Europe Index and MSCI World Index, yesterday's release said. Each fund house may apply for no more than two of the equity mandates, according to the statement.
Applicant firms must also have more than six years of investment experience as of March 31, and be registered in a country whose financial regulator has signed a memorandum of understanding with China's securities watchdog, the NSSF said.
Global fund companies began competing to manage the money after the government dropped a restriction that limited the Beijing-based pension agency to domestic markets. According to rules that took effect in May 2006, China's pension fund may make overseas investments in stocks, funds, financial derivatives, and corporate and sovereign bonds.
The Chinese pension fund earned more than 100 billion yuan in returns last year, buoyed by rising stock markets. The rate of return on its investments averaged 10.7 percent over the past five years, according to the fund's website.
The NSSF is accepting applications until June 18.
Source:China Daily/Agencies
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