This case highlights the rise of China in the global economy and capital markets. Many wealthy individuals and institutional investors in China are seeking better asset management services. As foreign asset managers make strategic plans for China, China’s opening of its financial markets provides foreign asset managers opportunities as well as challenges. Specifically, the case deals with how the world largest hedge fund, Bridgewater Associates, LP (Bridgewater), founded by Ray Dalio, develops its China business under its wholly foreign-owned enterprise Bridgewater (China) Investment Management (BCIM).
Students are expected to gain understanding of China’s capital markets and wealth management industry from the perspective of Yan Wang, the general manager of BCIM, who is deciding how to embark on the next stage in China by reviewing its strategy and product offerings together with all major challenges ahead. Students can determine if the culture, products, and success factors of foreign asset managers work in China and discuss the potential strategies a foreign asset manager may undertake to develop its business in China. In addition, the case can be used for the discussion of the application of diversification, asset allocation, and all-weather strategy in practice and the merits and challenges of investing in the A-share market and RMB assets.
The key teaching and learning objectives of the case are:
- To understand asset allocation, diversification, wealth management, all-weather strategy, and risk parity.
- To understand the development and opening of China’s capital markets.
- To explore the opportunities and challenges associated with the financial reforms and economic development in China for foreign asset managers.
- To provide students a basic understanding of investing in A-shares and RMB assets.