VS Partners Advances the Boutique OCIO Model in China with QFII Approval

Feb-11,2022 | VS Partners


[Hong Kong] VS Partners (Hong Kong) Co., Limited ("VS Partners") was recently granted QFII (“Qualified Foreign Institutional Investors”) qualifications by the China Securities Regulatory Commission. VS Partners is among the early batch of offshore institutions that receive QFII qualification after the new QFII regulation was implemented on November 1, 2020. OCIO (Outsourced Chief Investment Office) is an emerging asset management model that proliferated in the United States in the 2000’s. Under the macro backdrop of “dual circulation” strategic policy, VS Partners’ QFII approval demonstrates that the domestic regulators are encouraging forward-looking foreign institutional investors with the capabilities of multi-market investment research, asset selection and portfolio implementation to broaden and deepen participation in the onshore capital markets.

The Measures for the Administration of Domestic Securities and Futures Investment by Qualified Foreign Institutional Investors and RMB Qualified Foreign Institutional Investors ("QFII New Regulations") that came into effect on November 1 aims to gradually broaden the investable universe by foreign institutional investors to privately-distributed securities funds, futures, options, securities margin trading, etc. Moreover, to attract a more diverse universe in terms of types of foreign investors, the new regulation relaxed the entry requirements and speeded up the review process, which reflects an inclusive and open regulatory stance.

With continuous reform of China's capital market infrastructure, strong recovery of Chinese economy and relatively favorable interest rate environment, Chinese assets have also become increasingly attractive. At present, global investors have doubled the investments in A-shares and onshore bonds market compared to five years ago. The actual yields of A-shares and onshore bonds are more attractive than the US, European and Japanese markets. However, when it comes to asset allocation, overseas long-term investors are still on a learning trajectory to increase their Chinese investments due to lack of in-depth understanding of China's financial system, industrial structure, asset classes, and asset managers. On the other side, thanks to the development of financial market and the talent development associated with it, a number of asset managers who uphold differentiated investment philosophies and disciplined investment processes have emerged in various asset classes.

As the pioneer in introducing the boutique OCIO model to China, team members of VS Partners have long-term experience in leading global asset management institutions, and in-depth understanding of the Chinese market and domestic managers. Combining international culture acumen and Chinese background, VS Partners nimbly applies the advanced methodologies of manager research, asset allocation and risk management proven in developed markets in a Chinese context to construct customized portfolios for long-term overseas asset owners that expect to benefit from China’s reform and growth. On the other hand, by researching and investing in leading domestic fund managers in various asset classes and strategies, VS Partners could help domestic managers enhance their profiles in offshore capital markets and expand their exposures to a broader base of high-quality asset owners overseas, which is constructive to the development of the fund management industry.