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According to three sources familiar with the matter, UBS is taking steps to streamline its China private funds business, including shutting down some funds and reducing staff by one-third as part of a cost-cutting measure. Out of the 19 private funds launched by UBS since 2016, up to 17 equity and bond funds will be closed, with the money returned to investors, reflecting the bank’s shift in focus.  

The fund management unit, UBS Asset Management Shanghai, is expected to begin laying off around one-third of its 50-member team, aligning with recent actions by other global asset managers in China. 

UBS intends to redirect its strategy towards alternative investment approaches like funds of funds and expanding private fund investments in overseas markets, as disclosed by all three sources. Despite declining to be named due to lack of authorization, a UBS spokesperson emphasized China’s significance to the bank’s strategic investments, refraining from direct comments on the fund closures and staff reductions.  

This move underscores the challenges faced by foreign asset managers in China, attributed to cost-cutting pressures, fierce competition from local counterparts in the private fund sector, and subdued returns from Chinese markets. 

In response to the broader market trends, several Western asset managers, including Fidelity International and Legal & General, have downsized their local workforce or halted expansion plans. UBS itself abandoned plans to establish a new Chinese mutual fund unit last year, opting to maintain a joint venture formed after acquiring Credit Suisse. Consequently, staff hired by UBS since 2021 for the proposed mutual fund unit will be affected by the layoffs, spanning across various departments. 

Data from the Asset Management Association of China indicates that five out of the 19 private funds launched by UBS have already been closed. The Swiss financial group is now reallocating its resources within the Chinese asset management market, consolidating platforms and integrating resources from Credit Suisse. Notably, UBS has secured an additional USD 500 million quota under China’s cross-border Qualified Domestic Limited Partnership program, formerly owned by Credit Suisse, to invest in offshore assets for domestic clients.  

This expanded quota enables UBS to meet rising outbound investment demand, with plans for one or two more fund launches under the program this year. Additionally, the bank aims to enhance its fund of funds offerings through its Shanghai asset management unit, in addition to its existing joint ventures focusing on traditional equities and bonds. The assets managed by UBS Asset Management Shanghai are estimated to range between 2 billion yuan and 4 billion yuan (USD 276 million to 552 million), according to AMAC data. 

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