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Source: Reuters

UPDATE 1-China NSSF hires fund managers to invest abroad-sources

Published: 09 Jun 2009 01:51:29 PST

* NSSF appoints new set of foreign fund managers

* Pension fund started doling out money in April

* BNY Mellon, Schroders, Fidelity and Martin Currie picked

SHANGHAI/HONG KONG, June 9 - China's National Social Security Fund (NSSF) is ready for a new round of investment in global capital markets as it has appointed a new set of foreign asset managers, including BNY Mellon Asset Management and Schroders, sources said on Tuesday.

The $80 billion NSSF awarded mandates to a group of international fund managers, which also includes Martin Currie and Fidelity Investments, and started doling out money in April, said the sources with direct knowledge of the matter.

It was not clear how many fund managers in total were picked and the sources declined to say how much money in total was being authorised by the NSSF for investment in global markets.

The new mandates, which followed a beauty parade launched last May, represent the NSSF's latest effort toward a more diversified global portfolio. In late 2006, the Chinese national pension fund selected 10 foreign fund houses to help invest $1 billion in global capital markets, mainly stocks and bonds.

"The global economy is bottoming out, so it's much safer investing abroad now than during the worst of the crisis last year," said Shenyin Wanguo Securities Co analyst Wei Zhiyu.

"The government may also need to take a more aggressive investment strategy with foreign currency holdings to counter the impact of a depreciating dollar."

Global stock markets have rebounded strongly this year, with Hong Kong's benchmark Hang Seng Index up 25 percent, and the Dow Jones industrial average bouncing 35 percent from March lows.

Under the latest mandates, select foreign fund managers will help the NSSF to invest in five different equity classes, including shares in overseas Chinese companies, the Asia-Pacific (ex-Japan), emerging markets, Europe and global markets.

ASSET ALLOCATIONS

BNY Mellon Asset Management, the fund unit of the Bank of New York Mellon Corp will help manage a global portfolio for the NSSF, a person with direct knowledge of the mandate said.

Scottish fund manager Martin Currie, the largest foreign money manager in China's A-share market, has won a mandate to invest in Asia-Pacific (ex-Japan) stocks.

U.K. fund house Schroders and U.S. asset manager Fidelity have also won mandates, people with direct knowledge of the matter said.

Representatives for BNY Mellon, Schroders, Martin Currie and Fidelity all declined to comment, as did an NSSF spokeswoman.

The sources declined to be identified as they were not authorised to speak with the media.

The NSSF, headed by former central bank governor Dai Xianglong, has been increasingly relying on independent experts to manage assets to help sustain an annual investment return of 8.89 percent since the fund was established in late 2000.

Nearly half of the NSSF's 562.4 billion yuan ($82.29 billion) in assets at the end 2008 were being managed by domestic and overseas fund managers, according to its website.

The NSSF was also seeking central government approval to invest billions of dollars in foreign private equity funds this year, Reuters reported last month.

China needs to revamp its national pension system to meet the challenges of an aging society, and the long-term success of any reforms rely on independent management of personal pension assets, Richard Jackson, a professor at the centre for Strategic & International Studies said in a recent research report.

($1=6.834 Yuan)

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