Schroders is exiting its wholly-owned China fund management business in a deal to transfer operations to US rival Neuberger Berman. The move follows shareholders' approval of the £9.9bn sale of the London-based fund house to Nuveen last month. The China unit, managing 1.7bn yuan ($237m) in mutual fund assets as of March, represents a smaller, sub-scale operation being trimmed ahead of the larger transaction's completion.

Under the agreement, Neuberger Berman's wholly-owned China unit will acquire the product line of Shanghai-headquartered Schroders Fund Management (China), launched in 2023. Financial terms remain undisclosed. Schroders separately explores buyer interest in the unit's license, its most valuable strategic asset. South Korean asset manager Mirae Asset Financial Group reportedly joins other parties seeking the prized regulatory permit allowing full ownership in China's $5.6tn fund market.

Schroders' decision marks the first concrete signal that the wholly-owned model may not suit all foreign managers. The firm maintains its controlling stake in a wealth management joint venture with Bank of Communications and minority position in their fund management venture. China's 2020 opening of its financial sector created opportunities for BlackRock, Fidelity International, and others, but joint ventures now appear more attractive for managers without scale to absorb prolonged build-out costs.