China Universal plans launches for Europe, MRF

The Chinese fund firm aims to debut its RQFII Ucits in Europe this month, while it sees potential regional institutional demand for its onshore expertise under mutual recognition.
China Universal plans launches for Europe, MRF

Shanghai-based China Universal Asset Management (CUAM) plans to launch its first Ucits bond fund in Europe this month.

The fund house's Hong Kong arm also plans to tap regional institutional investors by introducing onshore Chinese products into the recently launched Mutual Recognition of Funds (MRF) scheme.

David Deng, executive director at CUAM's Hong Kong office, told AsianInvestor the firm planned to launch a bond fund this month via its Luxembourg Sicav, the legal structure by which funds qualify for status as a Ucits. The fund will invest in the onshore inter-bank bond market via renminbi-denominated qualified foreign institutional investor (RQFII) quotas.

CUAM is planning to launch the fund under its own brand name, rather than having the fund share its name with a European partner. However, CUAM will need to work with distributors and has been in discussion with several European firms. “It [Luxembourg sicav platform] allows us a greater freedom in launching new products, which is consistent with our business strategy,” said Deng.

Other Chinese managers such as Harvest, E Fund and CCB International used a partnership model when listing their Ucits exchange-traded funds in Europe. E Fund worked with ETFS, Harvest used their shareholding partner Deutsche Asset & Wealth Management and CCBI teamed up with Commerzbank. 

But CUAM plans to market its bond fund under its sole name. Asked if the firm planned to set up an office in Europe, Deng said it was a long-term plan for the firm.

Apart from its expansion in Europe, CUAM sees the China-Hong Kong MRF, formally launched last month, as a key part of its plans to tap regional institutional investors, particular pension and insurers from Taiwan.

Deng said such institutions were the key investors in its RQFII funds already, but MRF products could provide additional choices for them.

In the first batch of southbound applications under MRF, Deng said the firm had chosen funds with total AUM over Rmb2-3 billion and a strong performance record. He said fund size was a concern to distributors as funds sold to overseas investors under MRF should not more than 50% of a fund’s total assets.

Deng, however, declined to comment when asked how many and which funds the firm had applied to the Securities and Futures Commission (SFC) for. CUAM has 22 eligible funds under MRF, according to Morningstar.

China Universal had a total of Rmb220 billion in AUM as the end of June, by data from the Asset Management Association of China (Amac).

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