Fidelity International (FIL) is planning to exit its wholly owned China fund management unit, according to two people familiar with the matter, in what could become one of the most significant retreats by a global asset manager from China’s US$5.9 trillion public fund market.
The London-headquartered asset manager, which oversees US$1.18 trillion in client assets globally, is considering a full withdrawal from its onshore fund business just three years after launching the operation, the sources said. They spoke on condition of anonymity because the plans are not public.
Fierce competition from local firms, frequent leadership changes and difficulties in achieving sufficient scale have convinced senior FIL executives that the retail fund venture is no longer commercially viable, the sources said.
The potential exit highlights growing challenges facing foreign financial firms in China, where squeezed margins have made it difficult for global asset managers to expand since Beijing began allowing wholly foreign-owned fund management companies in 2020.
Six global asset managers, including FIL and BlackRock, established onshore operations following the policy change.
“China remains an important market for Fidelity International and we continue to believe it offers attractive long-term opportunities both for our business and for investors. There is no change to report on our strategy or market presence,” FIL said in a statement.
FIL was originally established by Boston-based Fidelity Investments as its international arm before being spun off as an independent business in 1980. Both companies are chaired by US businesswoman Abigail Johnson.
It remains unclear how FIL would restructure or liquidate its 14 China retail fund products, which have about 4.5 billion yuan (US$670 million) in assets. The figure is significantly below a target outlined in a 2024 internal document reviewed.
The document showed that FIL believed its China fund business needed at least US$14 billion in assets to become profitable by 2029.
Assets under management at the China unit peaked at 6 billion yuan a year after its launch before falling by about 25 percent as of the end of June, according to its latest product reports.
The Shanghai-based operation employs nearly 100 people, one of the sources said.
The China Securities Regulatory Commission said it had not received any formal withdrawal application from FIL.
Any decision by FIL to leave the market remains subject to change and would require regulatory approval. If completed, however, the move would mark one of the most prominent retrenchments by a foreign asset manager from China’s onshore mutual fund market in the past decade.
FIL has invested about US$218 million in the unit, the largest capital commitment among foreign wholly owned fund houses, according to business registration records. BlackRock has invested about US$215 million.
The potential withdrawal comes shortly after British asset manager Schroders became the first foreign manager to exit its wholly owned onshore fund unit. Schroders transferred its products, which managed about US$250 million in local assets, to Neuberger Berman following difficulties in achieving scale.
Other international firms have also scaled back their ambitions in China. Legal & General Group halted its expansion plans, while Vanguard closed its local fund sales joint venture and abandoned plans to enter China’s mutual fund sector.
A FIL exit would mark another step in the company’s broader retreat from China. The move comes as the Chinese economy has lost momentum amid weaker industrial output and consumer spending.
FIL cut about 500 positions at its Dalian technology and operations centre in late 2024 amid data-related concerns. Earlier that year, it had reduced its local fund management workforce by 16 percent as sluggish growth and rising costs weighed on the business.
The China fund management unit has also experienced significant leadership turnover since its establishment, with four board chairmen and three chief executives taking the helm in roughly five years.
