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As global managers from UBS Group AG to BlackRock Inc. get into China’s $2 trillion investment industry, they’ll need strong stomachs to run hedge funds in a Communist country.>
These lightly regulated pools, whose 1 million yuan ($158,000) investment threshold targets institutions and high-net-worth individuals, are sizzling hot. As of end-March, so-called “private securities funds” – mostly in equities and funds of funds – commanded 2.6 trillion yuan of assets, up from less than 1 trillion yuan three years ago. The actual total is probably a lot higher: At least 10,000 funds are illegally raising money because they’re not registered with the Asset Management Association of China.
New Riches, Private Money
As of end-March, China's private funds industry managed more than 12 trillion yuan of assets. Private securities funds, which invest mostly in stocks, managed 2.6 trillion yuan
Source: Asset Management Association of China
No financial product can flourish without Beijing's implicit blessing. Last October, China passed sweeping rules to curb risks in the financial system, whose notorious shadow banks offered wealth-management products that were perceived as risk-free. By letting mutual funds and hedge funds multiply, China is shifting to a healthier model like that in the U.S., where investors understand returns are compensation for risks taken.
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Source : https://www.bloomberg.com/gadfly/articles/2018-04-24/how-to-run-hedge-funds-in-a-communist-country