Private credit might be less attractive than it was last year as investors rush into the market, but there are sweet spots to be found.
The company is an arm of CCB International (Holdings), a Hong Kong-based investment banking subsidiary of China Construction Bank. It is not related to a Beijing-based funds joint venture company with Principal Global Investors.
The China Policy Driven Fund is meant to provide out-performance by staying abreast of government initiatives. The global financial crisis has prompted Beijing to launch policies designed to increase fixed-asset investment, raise household incomes, stimulate domestic demand and keep GDP growth on track.
The fund managers think they can use CCBÆs contacts and understanding of such policy decisions to profit from following government measures, and are therefore charging a 1.75% annual management fee. There is also a subscription fee of up to 5% of the issue price of each unit and a redemption fee of up to 5% per unit price. News of this fund was announced sufficiently late in the day to allow CCB International to avoid questions from AsianInvestor about exactly how it will justify such high charges, or who exactly is going to run this portfolio.
The fund will invest in equities, equity-related securities and bonds that are listed in Hong Kong or other international exchanges that are set to benefit from Chinese policies. China Construction Bank (Asia) will distribute the fund and HSBC Institutional Trust Services is trustee and registrar. The initial offer period runs till January 21 with an initial offer price of HK$10 per unit.
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Actively managed funds were also not found to have better odds of higher returns than more passive funds.