In China's asset management industry, Fan Hua stands out as a unique figure.

Admitted to Peking University's mathematics department, earning a Ph.D. in finance from Columbia University, becoming the head of Goldman Sachs' Global Risk Models Department, serving as Director of Asset Allocation at CIC, and acting as Chief Equity Investment Officer at CMB Wealth Management – any one of these accomplishments could build a stellar resume. When they converge on one person, they outline a unique career path that spans both overseas and domestic finance, covers front, middle, and back offices, and combines global vision with local practical experience.

In September 2022, Fan Hua joined BlackRock, the world's largest asset manager, as the General Manager of its joint-venture wealth management company, BlackRock CCB Wealth Management. In 2024, she was promoted to Head of BlackRock China and Chairwoman of BlackRock Fund. When she took charge, BlackRock's China public fund business was undergoing a painful period. After five years of operation, the public fund scale of BlackRock Fund had reached nearly 12 billion yuan by the end of June 2026, placing it firmly in the first tier among the six wholly foreign-owned public fund firms established after 2020.

On a summer afternoon, Fan Hua had an in-depth conversation with us, sharing the accumulation and insights from her career, her dialectical understanding of returns and risks, her perception of the fundamental development of the asset management industry, her understanding of the strategic differences between wealth management products and public funds, and her vision and blueprint for BlackRock's future business in China.

From Academia to Finance: Witnessing the Core Logic of Risk Management

Q: Looking back at your career, from Peking University's math department to Columbia's finance program, and then to Goldman Sachs, how did this journey unfold step by step?

A: When I was in middle school, I actually wanted to study economics. But at the time, someone suggested I build a solid math foundation first. So, I first went to Peking University's math department. Later, I went to Columbia University's statistics department, but I quickly realized finance was closer to my ideal, so I soon transferred to Columbia Business School to complete my Ph.D. in finance.

After graduating in 1998, I joined Goldman Sachs in the risk management department. At the time, Goldman Sachs was a leader in many areas of the industry, especially in derivatives, which required many complex models and people with a background combining math and finance.

Shortly after joining Goldman Sachs, I encountered the Long-Term Capital Management (LTCM) crisis. The founders of LTCM were themselves academic luminaries, yet they could not avoid the crisis.

Q: What specific work were you responsible for at Goldman Sachs?

A: Initially at Goldman Sachs, I was mainly responsible for the model risk of derivatives. I first managed the New York team, and later participated in the construction and execution of the entire risk model for Goldman Sachs. The two things that impressed me most from that experience were:

First, the asset books of institutions like Goldman Sachs are very complex, involving various derivatives, so trading and risk control must keep pace simultaneously.
Second, Goldman Sachs has a very strong risk management culture, excellent technical tools and systems, and a very close integration of academia and financial practice, which is crucial for doing a good job in risk control.

The Core of Risk Management is to "Avoid" Unwanted Risks

Q: Goldman Sachs is widely regarded by the outside world as one of Wall Street's strongest institutions in risk control. What do you think is the reason for a financial institution to have good "risk control"?

A: I prefer the term "risk management." Because whether in investment banking or asset management, the core is not simply to minimize risk, but to manage risk and avoid the risks you don't want.

In asset management, you must take on risks you can bear to obtain the returns you want. If you take on no risk at all, you cannot achieve returns.

My experience at Goldman Sachs helped me understand early on that risk management doesn't mean taking no risks. It means knowing exactly what risks you are taking, which risks you are willing to take, and which risks you should not take.

Q: You experienced the first half of the subprime mortgage crisis on Wall Street. What lessons did you learn from it?

A: The subprime mortgage crisis happened for a reason. The U.S. was going through a period of a booming real estate market. Initially, mortgages themselves were profitable. Then the financial industry began a credit downgrade, using various methods to issue loans to people who might not be able to repay them. These loans were then repeatedly packaged, tranched, and resold through financial derivatives, causing the overall risk to magnify continuously within the industry.

When the market reversed, these hidden risks triggered a series of mechanisms in structured products, leading to a chain reaction in the market, which eventually became a systemic financial problem.

This is a very important warning. In the financial industry, even if you "dodge" many risks early on, once systemic risk arrives, products and institutions that have not done a good job of risk management can hardly remain unscathed.

Therefore, the awareness and management of risk can never be neglected at any time.

Asset Allocation is the Core Function of Asset Management

Q: In 2007, you returned to China and joined CIC. What did you gain during this period?

A: I originally returned to China to participate in a joint venture securities project between Goldman Sachs and ICBC. But the 2008 financial crisis hit, and during this time I was seconded to CIC, and later formally joined the company.

CIC was officially established in 2007 as China's first sovereign wealth fund. In its early days, everything from the team to the systems was in an exploratory phase.

However, CIC had a huge advantage: its enormous capital scale and influence. The world's best institutions were willing to come and exchange ideas. At the same time, CIC sent many people overseas to research and learn from other sovereign funds. These experiences gave the team at that time a very deep understanding of how large, long-term capital operates.

I was very fortunate to participate in such an open and transparent exchange process. I also participated in building the asset allocation framework (as Director of the Asset Allocation Department), setting the "yardstick" for asset allocation for funds worth hundreds of billions of dollars, and driving its execution.

Later, I worked in the front-line fixed income and absolute return departments, directly responsible for specific investment work. It was also during my time at CIC that I formally transitioned from risk management and the middle/back office to the front office of investment.

Q: The outside world believes that CIC's long-term asset allocation has been very successful. How was this asset allocation framework built?

A: For a sovereign fund the size of CIC, asset allocation work is the core function. For a national sovereign institution of this scale, the most important thing is to establish a good long-term strategic asset allocation framework that can promote the long-term, rational deployment and allocation of assets.

At the time, we drew on the experience of overseas sovereign funds and pension funds. We also tailored a relatively long-term, systematic multi-asset class allocation plan based on national conditions. The overall approach was quite close to the long-term "equity and bond structure" portfolio common among global sovereign funds.

Another very important aspect was the assessment cycle. We set the assessment as a long-term rolling evaluation, which is crucial for long-term capital. Because long-term capital must be able to withstand short-term fluctuations to capture long-term returns.

Q: It seems long-term capital must endure short-term fluctuations?

A: Yes. The scale of national sovereign funds is usually very large; they are unlikely to engage in many short-term trades. Therefore, they should follow the asset allocation logic of large institutions.

The asset allocation logic of large institutions revolves around making large allocations around the strategic allocation target and executing "rebalancing" when appropriate. When stocks fall significantly, you buy more at the low point through rebalancing; when stocks rise significantly, you sell a portion to buy other assets. This is a disciplined process that must be completed.

If you cannot tolerate short-term fluctuations and your assessment cycle is too short, the funds you hold may not capture long-term returns due to frequent in-and-out trading.

Q: What about tactical asset allocation? Many institutions place great emphasis on tactical allocation and the importance of market timing.

A: The success rate of tactical allocation is relatively low, so generally, the risk budget assigned to it is not very high. Of course, the investment team will always actively look for opportunistic phase-based opportunities, as long as it's kept within a reasonable range.

Large institutions like overseas pension funds and sovereign funds generally do not make very extreme tactical allocation adjustments. Because the impact of many events might last a few months or a year or two, but your investment cycle might be 10 or 20 years. Underneath it all, you must believe in long-term technological progress and economic growth.

Q: Rebalancing is often very difficult to execute during a crisis?

A: Yes. If we discuss rebalancing temporarily when a crisis erupts, it involves the difficult judgment of "whether to add positions at the bottom" – which is very challenging. Because once a crisis hits, everyone tends to think the market could go even lower.

Therefore, the experience of many long-term institutions is: it's best to formulate the rebalancing policy in advance, when the market is relatively stable. If stocks fall to a certain level, positions are automatically increased. If you wait to discuss it when the crisis is already happening, it's very hard to reach a clear decision.

Experiencing the Transition of Wealth Management from the Asset Pool Era to "Net Value"

Q: From CIC to CMB Wealth Management, what were the main differences in job content and nature?

A: I held many roles at CIC. For instance, the work in the Asset Allocation Department was a bit like a "think tank." It was both the framer of the asset allocation strategy and the secretariat for the Investment Committee, involved in coordinating and implementing some of the committee's work.

At CMB Wealth Management, I became an asset manager. At the time, with the implementation of the new asset management regulations, the asset pool business of the wealth management industry was gradually being reduced, and products and assets began to correspond one-to-one. This was the process of asset net value transformation in the wealth management market.

This process meant that for every wealth management product, we had to clearly communicate its "definition" to the client: Are we aiming for relative returns or absolute returns? If it's absolute return, what assets will be allocated?

Furthermore, clients of wealth management products generally have a lower risk tolerance, so more attention needs to be paid to drawdowns during the product management process.

Looking back, these arrangements were very important for the development of the business at that time.

Q: At CMB Wealth Management, you were responsible for equity-linked products. Are these products harder for wealth management clients to accept?

A: Yes. But I often give an example: There is sometimes a "see-saw effect" between equity and bond assets. If you add a small amount of stocks to a portfolio, it doesn't necessarily increase risk. From a volatility perspective, it might even smooth out fluctuations.

So "equity-linked products" do not inherently mean higher risk.

Of course, when the stock proportion is high, stock volatility will drive up the overall portfolio's volatility. However, adding a small amount of equity to a portfolio that has none can, due to the diversification effect, give the wealth management product a better risk-return profile.

Leading BlackRock CCB Wealth Management: Understanding the Global System, Integrating Local Realities

Q: After 2022, you went to BlackRock CCB Wealth Management as General Manager. What were the initial challenges you faced?

A: BlackRock CCB Wealth Management is a joint venture wealth management institution. So, they hoped to bring in someone who understood both the Chinese wealth management market and the culture and asset management system of an overseas institution.

After arriving here, I found that many of my past experiences were useful. Whether it was the academic background, the model pricing and risk management from the Goldman Sachs era, or the global asset allocation and long-term capital management experience learned at CIC, they could all play a role at BlackRock CCB Wealth Management.

But the challenges were also significant. Goldman Sachs is a large sell-side institution, CIC is a national sovereign fund, and CMB Wealth Management is a major domestic bank wealth management subsidiary. In contrast, BlackRock CCB Wealth Management was a very small joint venture wealth management company starting from scratch. This entrepreneurial process required understanding the systems of the world's largest overseas asset manager while integrating with the reality of the Chinese wealth management market.

Q: Why did BlackRock CCB Wealth Management initially lean towards issuing more low-risk products?

A: One important reason was industry rules and market reality. At that time, products with a risk rating of R3 and above faced complex sales processes and significant sales difficulties. The proportion of R3 and above products in the total market scale was also declining year by year.

At the time, we considered that if a company wants to survive first, it should still do some traditional wealth management products, such as closed-end fixed income and short-term bond products, to lay a solid foundation.

At the same time, we also planned to create some distinctive products, such as USD-denominated products, pension products, and multi-asset products. These distinctive products could demonstrate better performance when related market opportunities arise.

In the future, we also hope to promote products like "fixed income plus," multi-asset, and all-weather allocation products that can invest in overseas assets, demonstrating our differentiated capabilities.

Q: The performance of BlackRock CCB Wealth Management's pension products has been very prominent in the market. How were they initially designed?

A: Among the first batch of pilot pension wealth management products, BlackRock CCB Wealth Management's products were different from others on the market. As a foreign institution, non-standard assets are not our strong suit. So, we relied more on the fundamental principles of asset allocation, using the management of standardized assets like stocks and bonds to generate returns.

At the time, based on regulatory requirements, the relevant product should have been a combination of a stock strategy and government bonds, with the bonds being long-term bonds. However, considering the specific circumstances, we made a breakthrough and designed the product as a 10-year product. This allowed our expected return rate to be more competitive. It was likely one of the earliest 10-year pension wealth management products on the market.

Our management of these products has been entirely based on a long-term, market-oriented perspective, holding stocks and bonds for the long term to obtain corresponding returns. Looking back, with interest rates declining over the past few years, long-term bonds have performed well. The stock market also experienced a correction cycle before rising again. Now, the performance of this product is quite good. Its volatility might be relatively higher, but its medium-to-long-term return has basically achieved our expectations.

Optimizing Public Fund Positioning: Developing Differentiated Advantages in Key Areas

Q: Later, you became the Head of BlackRock China and started managing BlackRock Fund. How is this different from your previous work?

A: The operational and management challenges of a public fund company are greater than those of a bank wealth management institution.

The total scale of the national wealth management market is similar to that of the public fund market. However, there are about 30 bank wealth management institutions, while there are over 160 licensed public fund firms. This means there are more public fund firms, competition is fiercer, and product homogeneity is more obvious.

In terms of product creation, innovative products in the public fund industry require individual regulatory approval. Some products that could easily reach a large scale are no longer easily approved. Additionally, as a new fund company lacking a long-term performance track record, it can be somewhat disadvantageous when trying to get on institutional investment lists.

Q: How does BlackRock Fund find its own distinctive path for development?

A: First, we need to look at where our advantages lie. This is why we are now putting more energy into systematic investing.

BlackRock Group's overseas systematic investment team has long-term accumulation, mature quantitative methods, and advantages in alternative data (BlackRock globally spends tens of millions of dollars annually on purchasing alternative data). Data advantages and experience advantages are very important in systematic investing and represent a relatively high barrier for latecomers.

We hope to introduce more mature overseas systematic investment strategies into China. This isn't just about active quantitative strategies. In the future, some active fundamental strategies might also use a systematic investment engine, leveraging BlackRock's systematic advantages.

On the other hand, we also take seriously products with unique requirements in the Chinese market, such as green bond products. We manage investments by aligning with the domestic market's green bond standards, client expectations, and the mature management methods of bond index funds. We cater to localized client needs to manage our green bond products.

BlackRock's Talent Philosophy: Teamwork, Cultural Alignment, and Entrepreneurial Spirit

Q: What are the criteria for talent selection at BlackRock China?

A: BlackRock's overall culture is similar to some excellent institutions. It pursues excellence and emphasizes team spirit. We have a concept called "One BlackRock," meaning that team members deeply collaborate and strive forward together.

When selecting talent, professional competence is certainly the foundation. But on top of that, we value whether candidates identify with BlackRock's culture and possess team spirit. The asset management industry is not about fighting alone. No matter how strong an individual is, they must be able to collaborate with the team. Good communication skills and team spirit are very important.

BlackRock places great importance on employee career development. The company values employee growth. It has an internal mobility mechanism and encourages employees to take on more complex, broader-dimensional tasks beyond their primary duties. While BlackRock may not offer the highest compensation in the market, its platform is very powerful.

BlackRock advocates for an internal culture of equality and respect. The company cares about work-life balance. Employees at BlackRock don't need to clock in. If an employee has special needs, as long as they can complete the work assigned by their leader, there can be some flexibility in work arrangements.

Q: What characteristics do you hope the current BlackRock China team possesses?

A: In the past couple of years, we have been emphasizing an entrepreneurial spirit. BlackRock is a huge organization globally, but in China, we are still a startup. The domestic market changes very quickly, so our pace cannot be slow, or we won't be competitive.

We encourage employees to have an entrepreneurial mindset and a problem-solving attitude. When facing challenges, they shouldn't simply say "this won't work" or "can't be done," but should actively work towards solving the problem. When coordinating with overseas teams, they should also actively promote matching overseas resources with the needs of the Chinese market and aligning with the pace of the Chinese market.

We believe that as BlackRock China continues to develop, the local team will receive more and more overseas support, and there will be more and more "chemical reactions" between the local team and overseas experience.

Q: Foreign asset management institutions entering China often face the dual challenge of absorbing international experience and adapting to the local market. How does BlackRock China balance global experience and local needs?

A: In the past few years, BlackRock has done a lot of work on localization. For instance, when the company was first established, English requirements were relatively high. As the company matured, we lowered the English requirements for new hires and placed more emphasis on their capabilities in the local market. In recent years, we have brought in many excellent talents who have worked successfully in the domestic market. This has significantly deepened our understanding of local clients, local channels, and local operating models.

Now we have a relatively good understanding of the domestic market. On this basis, we need to further leverage BlackRock's global advantages. Fully utilizing these advantages will help us overcome the current problem of excessive product homogeneity in the domestic market and find more momentum for our development.

Additionally, with domestic interest rates currently low, there is increasing demand for global allocation. As a large overseas asset management institution, we can provide a global perspective, overseas insights, and multi-asset strategies. This is precisely where our differentiated capabilities lie.

The Era of Global Investment: Aspiring to be the First Choice for Chinese Clients' Global Allocation

Q: In the era of global investment, what role can BlackRock China play in the internationalization trend of the Chinese asset management market?

A: We have mentioned before that internationalization has two different directions: China to Global (outbound) and Global to China (inbound).

For the China to Global direction, although there are some limitations regarding quotas and product approvals, we believe the big trend is that Chinese clients, driven by a need for portfolio diversification, will gradually want to do more global allocation. This market will slowly grow.

For the Global to China direction, since September 2024, the Chinese stock market has experienced a bull market, and returns have improved. Compared to overseas markets, Chinese assets are valued relatively reasonably. Overseas investors are gradually seeing that China is not just about baijiu and new energy; it also has strengths in technology, AI, manufacturing, and robotics. From an asset allocation perspective, overseas investors may also have expectations of increasing the proportion of Chinese assets in their global portfolios. In this regard, we will also be preparing seriously.

Q: In the next three to five years, what kind of institution do you hope BlackRock will become in the Chinese market?

A: We hope that BlackRock China can become the first choice for Chinese clients in their global asset allocation.

On one hand, we are backed by the world's largest asset management group. The global assets, strategies, and products that the BlackRock Group can offer are very rich, giving Chinese clients a wide range of choices.

On the other hand, the BlackRock China team has many talents with both a global perspective and local experience. We also hope to combine these two advantages to bring more global assets and mature strategies to China, allowing Chinese investors to share the returns from global allocation.