The Boston, US-based organisation has taken a look at the dynamics shaping China's asset management sector.

China-based fund management companies must shift their business focus from money market funds this year and tap into improving equity market sentiment, according to a survey of the sector by Cerulli Associates that also touches on the impact of e-commerce on the industry.

The report comes at a time when there has been a trend of Internet-based firms entering the asset management business in China over the past two years. Alibaba, the giant Chinese firm that held its IPO last year, through its affiliate, Ant Financial, has a plan to acquire a stake in Tebon Fund Management Company. That move came shortly after Tencent set up WeBank, China's first online bank, last year.

Cerulli reckons that Ant Financial's anticipated entry into the space adds to the pressure on fund management companies. It notes that the only viable online opportunity these companies can access for now remains money market funds, but their attraction is diminishing because yields are falling.

Such fund management firms must move away from money market funds in 2015, Cerulli said. “The potential of the FMC subsidiaries business, as well as improving sentiment in the domestic equity market, might provide just the right ingredients for managers to explore new business approaches, and focus more on the business of active management,” the report, called Asset Management in China 2015, said.

“However, to do that, the effective marshalling of asset management talent within firms is necessary to prevent the departure of management expertise to the more lucrative private fund industry. Retaining existing manager talent will also be important for FMCs,” it said.

War for talent
Cerulli says the battle for talent in investment management will intensify as channels to gain exposure to China expand in depth and breadth.

"The establishment of a 'business unit', a satellite business operating within an FMC, is one such innovation that several small FMCs such as China Post & Capital and Zhong Ou Asset Management have been implementing in an attempt to retain the best minds within the firm," Felix Ng, associate director with Cerulli who leads the China research initiative, said.

"The idea is to provide more autonomy to star managers by allowing them to run all operations within the business unit, including recruitment and determining profit-sharing within the unit," Ng added.