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BlackRock tests Chinese retail appetite with mutual fund launch

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SHANGHAI (Reuters) - BlackRock, the world's largest asset manager, started selling its own mutual fund in China through a local subsidiary on Monday, tapping the fast-growing $3.6 trillion retail fund market.

The launch of the actively-managed, unconstrained equity fund by BlackRock's newly-established unit in Shanghai is being closely watched, said Ivan Shi, head of research at fund consultancy Z-Ben Advisors.

The BlackRock China New Horizon Mixed Securities Investment Fund aims to raise up to 8 billion yuan ($1.24 billion).

"It's a very localised product," Shi said. "It attracts a lot of industry attention because it's the first mutual fund product by a wholly-owned foreign fund house in China."

BlackRock became the first foreign asset manager to operate a wholly-owned mutual fund business in China after the government scrapped a foreign ownership cap in the industry on April 1, 2020.

In addition, the U.S. fund giant, which entered China more than 15 years ago, recently set up a majority-owned Chinese wealth management joint venture, which will also launch a maiden product soon.

"When we operate globally, we pay a lot of attention to really immersing into local markets, so that we can satisfy unique needs of local clients," Tony Tang, BlackRock's head of China, told a recent online roadshow.

The asset manager will roll out passively-managed funds in China in the future, Tang said.

China's mutual fund market is expected to grow to 60 trillion yuan ($8.75 trillion) in a decade, Z-Ben Advisors estimates, but competition is fierce in a sector crowded with more than 150 players.

A global brand doesn't ensure success in the China fund market, and BlackRock "needs to build a good track record locally to attract investors," said Shi of Z-Ben Advisors.

The New Horizon fund, to be managed by investment veteran Alex Tang, and Shan Xiuli, will focus on five areas including new energy, consumption, digital transformation, retirement, and technology, according to BlackRock's official website.

BlackRock also owns a minority stake in a Chinese mutual fund venture with Bank of China Investment Management Co.

($1 = 6.4678 Chinese yuan)

(Reporting by Samuel Shen, Jason Xue and Andrew Galbraith; Editing by Jacqueline Wong)

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