by LONG Li

A China onshore arm of Two Sigma, one of the world's best-known quantitative hedge funds, has crossed the 10-billion-yuan (about US$1.4bn) threshold in assets under management, becoming only the second wholly foreign-owned securities private fund manager in China to reach that scale, after Bridgewater (China).

Tengsheng Investment Management, controlled by Two Sigma Asia Pacific, Limited, recently completed a new fundraising round, with products quickly filled after being offered through China-based distribution channels. The fundraising has underscored a growing divide in China's private fund market, where a small number of foreign managers have achieved scale while most remain marginal players.

Founded in 2018, Tengsheng Investment registered with the Asset Management Association of China (AMAC) in 2019. AMAC disclosures, last updated in early 2023, list the firm's assets under management in the 5–10 billion yuanrange. According to media reports, a fundraising round of more than 1 billion yuan completed in November pushed the firm's assets beyond 10 billion yuan, lifting it into China's so‑called "ten‑billion‑yuan club".

AMAC filings show Tengsheng Investment employs 17 full-time staff, all licensed fund professionals. Its general manager, Carissa L Xu, has held senior roles across global market infrastructure, asset management and securities firms, including Fidelity Investments, UBS Securities and Two Sigma Asia Pacific.

Globally, Two Sigma was founded in 2001 by David Siegel and John Overdeck, both former partners at D.E. Shaw, and manages more than US$60bn, according to its website. In recent years, the firm has faced internal governance disputes and regulatory scrutiny. The founders stepped back from day-to-day management in 2024, and U.S. regulators said earlier this year that Two Sigma entities agreed to pay US$90m in civil penalties and return US$165m to affected funds over control failures linked to unauthorized model changes.

Tengsheng's expansion contrasts with the broader picture for foreign private securities managers in China. Wind data show that as of December 17, the mainland had 32 active wholly foreign-owned securities private fund managers. Nearly 60% managed less than 500 million yuan each, and only three firms—Bridgewater (China) Investment, Tengsheng Investment and the China onshore arm of D.E. Shaw—reported assets above 5 billion yuan.

Bridgewater (China) remains the dominant player, with assets exceeding 55 billion yuan by the end of 2024, and has continued to add products this year. A small group of mid-sized foreign managers has recorded modest growth, while others have exited the market by deregistering.

Industry participants say the divergence reflects structural and strategic constraints rather than a lack of opportunity. Some foreign firms entered primarily to secure onshore licenses, with limited follow-through on local teams and distribution. Others have struggled with weaker brand recognition and limited access to China-based channels, leaving them at a disadvantage against large local private fund houses.

China's private fund market, they say, has entered a scale-driven phase in which size, products and distribution increasingly determine survival. Tengsheng Investment's move past 10 billion yuan shows that foreign managers can still break through—but also underscores how rare such success has become.