Winners rationale

No word better sums up 2020 for Noah Holdings than “transformative”: the firm was implementing a radical overhaul of its product lines and business model, and finished 2020 strong in spite of a slew of obstacles. As the industry at large witnessed a tidal wave of change, Noah again emerged as a vanguard of China’s independent wealth management industry.

Set in motion in late 2019 to keep in check mounting credit risks in wealth management products and in response to regulators’ de-leveraging and de-risking agenda, Noah’s transformation journey has set an example for industry peers. As the COVID-19 pandemic hit China in 1Q20, Noah was in the midst of its product restructuring. It halted the sale of all credit-linked, single-counterparty products — a major part of its product shelf — and shifted to standardised, NAV-based products. Distribution of standardised products/public securities jumped as much as 347.5% YoY in the first three quarters of 2020.

The shift had been timely and achieved success. The wealth manager was confident that gains from the online sale of standardised products in 2020 could compensate for the transaction value of non-standardized credit products. In 3Q20, Noah’s revenue grew over 15% QoQ and non-GAAP net income had more than doubled compared with the 4Q19.

Noah self-developed a number of IT platforms to streamline operations, such as a comprehensive primary market investment management system for distributing and managing PE products, and an AI/big data-based mutual fund work station to improve the efficiency and accuracy of mutual fund products selection. It launched an overseas mutual funds platform, iNoah in June 2020, and updated the client-facing portal and onshore mutual fund platform to upgrade client interfaces. These endeavours brought down operating expenses by 21.2% YoY for the first three quarters in 2020 and kept clients engaged: in 3Q20, the number of active clients were up 31% YoY, while mutual funds active clients had grown a remarkable 167.6% YoY .

On the product front, Noah has a well-established and diverse open platform, featuring product providers ranging from mutual fund houses to private equity general partners. Its bespoke DPM portfolios, managed through its asset management subsidiary Gopher, provide a combination of house portfolios and customised elements such as co-investment schemes, delivering sustainable, risk-adjusted performances.

Apart from wealth management, Noah capitalises on its offshore presence by meeting the growing demand from Chinese clients for overseas diversification. By the end of 2020, Noah had obtained trust licences in Hong Kong, Jersey Island and Singapore, to better its wealth planning and family trust offerings, aiming to transforming wealth into legacy.

In 2020, Noah became one of the first wealth managers in mainland China to sign the UN Principles for Responsible Investment (UNPRI) and — building upon its commitment to sustainable investing — it is working on launching its first ESG investment fund in Hong Kong.

Noah exhibited remarkable adaptability in the face of macro and industry headwinds, and emerged afresh from a revolutionary year of changes, impressing clients with its unfailing engagement and deep understanding of their needs.

Noah Holdings is Asian Private Banker’s Best Independent Wealth Manager — China Domestic for 2020.