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Hong Kong is always committed to maintaining its status as a leading international fund management centre. Its combined fund management business reached $17,393 billion as of the end of 2015. Among different areas of the business, aggregate private wealth management including private banking and private client funds increased to $4,775 billion, even the global investment markets were in turmoil.
Asset management is regarded as one of the most important parts of fund management industry, with assets amounting to $12,259 billion by 2015. To capture the fast growing wealth in the region, the number of corporations licensed for asset management in Hong Kong rose by about 10% in 2015. The number of staff engaged in core asset management activities increased by more than 4% during the same period of time.
Huge rise in demand for asset management is actually a megatrend. According to a PricewaterhouseCoopers report, assets under management (AuM) worldwide is expected to exceed USD 100 trillion by 2020. Besides traditional active funds, passive and alternative investments are also well received by both institutional and retail investors nowadays.
Unit Trusts & Mutual Funds
The total number of authorized unit trusts and mutual funds increased by 4.3% yearly, with the number of Hong Kong-domiciled funds rising by about 10% to 656 as at the end of March 2016. As one of the world’s leading equity funding centres, most of the assets managed in Hong Kong were in the form of equities.
NAV distribution of authorized unit trusts & mutual funds as of end 2015
|Fund of Funds||1%|
|Hedge, Guaranteed, Others||1%|
Exchange-Traded Funds (ETFs)
Because of low management fee and broad market exposure, passive investment is gaining a larger share of the market. Passively managed and open-ended ETFs are designed to track the performance of their underlying benchmarks like an index or a commodity price, etc. Hong Kong was the second-largest ETF market in Asia in terms of market capitalization at the end of March 2016.
Exchange-Traded Funds Market
|No. of ETFs||133||+11|
|Average daily turnover||HKD 8.8 billion||+87%|
|% of total stock market turnover||8%||+1percentage point|
According to the SFC report, the number of hedge funds managed by licensed fund managers in Hong Kong increased from 676 in September 2012 to 778 as of September 2014. The total hedge fund AuM expanded to US$120.9 billion, a big jump of nearly 40% during the same period.
Equity long/short and multi-strategy remained the most popular investment strategies. For multi-strategy, the most common underlying strategies were equity long/short, event driven (equity special situations) and equity hedge (market neutral), according to the report.
Hedge Funds in Hong Kong
|September 2014 (compared with September 2004)|
|No. of hedge funds||778 (+595%)|
|Assets under Management||US$120.9 billion (+1,200%)|
Qualification highly depends on the job roles you are taking in the asset management industry. For example, if you have to deal with investment analysis related issues, possessing a Chartered Financial Analyst (CFA) credential is always appreciated.
The Securities and Futures Commission (SFC) is responsible for regulating practitioners who carry out 10 types of dealing and advising activities in Hong Kong. It sets licensing standards to ensure the practitioners are fit and proper. Regulated activities include:
Type 1: Dealing in Securities
Type 2: Dealing in Futures Contracts
Type 3: Leveraged Foreign Exchange Trading
Type 4: Advising on Securities
Type 5: Advising on Futures Contracts
Type 6: Advising on Corporate Finance
Type 7: Providing Automated Trading Services
Type 8: Securities Margin Financing
Type 9: Asset Management
Type 10: Providing Credit Rating Services
To become a licensed representative, a person accredited to a licensed corporation and carries out regulated activities for the licensed corporation has to sit for the Licensing Examination (LE) for securities and futures intermediaries. Representatives are required to pass a set of LE papers in respect of types of regulated activities participating.
In general, if you have a degree in Accounting, Business Administration, Economics, Finance or Law, or have passed any two of these courses when completing another degree, you would be exempted from the LE. However, you may still be required to take the local regulatory framework paper (Paper 1).
Take fund manager as an example, he is required to be licensed for Type 9 regulated activity in order to provide portfolio management services. if a salesperson is responsible for distributing unit trusts, a licence for Type 1 regulated activity is required as these activities constitute dealing in securities (unit trusts are securities).
To enroll in the examinations, you may contact Hong Kong Securities and Investment Institute for more information (except Type 3). Institute of Professional Education and Knowledge (of the Vocational Training Council) is responsible for Type 3, i.e. leveraged foreign exchange trading licensing examinations.
The Securities and Futures Commission (SFC):
Hong Kong Securities and Investment Institute (HKSI):
Vocational Training Council (VTC) – PEAK Exam Centre: