He added, though, that Harvest, one of the largest fund managers of the 80 or so with domestic Chinese licenses, is an active manager which looks to provide alpha for its investors. It has 50 analysts on the ground in China and offers a range of active strategies. Harvest, which is 30 per cent owned by Deutsche Asset Management, recently picked up its first Australian institutional mandate, for $100 million. Stephen O’Brien, chief executive of Deutsche Asset Management in Australia, said that while he cannot name the Harvest client, there is increasing interest from super funds in looking at more sophisticated strategies in their China exposures and paying more attention to alpha-producing capabilities. “There’s a feeling that the outperformance of China going forward may not be as great as it has been, at least in the mediumterm,” he said. “The government has announced a reduction in its growth targets and there are well known social infrastructure programs in place which won’t deliver immediate returns. “On the other hand, super funds realise they cannot ignore China or rely on their global and Australian equities portfolios for the exposure.

So, they are looking more closely at active management. Another issue is access, which is not so easy with China, as well as more fundamental questions regarding which asset classes and styles of manager.” Dr Zhao, who spoke at the Mercer Investments conferences in Melbourne and Singapore last month, said emerging markets, such as China, were dominated by retail investors who had different methodologies to institutional investors. Market disclosures in emerging markets often did not reflect all the information available about a company. The result is that information takes a lot longer to be disseminated and digested in emerging markets. Deutsche acquired its initial stake in Harvest in 2005 and subsequently lifted it to its current level. Harvest, which now manages about US$38 billion, formed an international arm, Harvest Global Investments, in Hong Kong in 2009. Last year it set up Harvest Alternatives and formed its first boutique, JT Capital, a Hong Kong-based hedge fund. The aim is to roll out a full range of boutiques offering alternative investment strategies, including private equity and infrastructure, in which Harvest has minority stakes.