China Asset Management (ChinaAMC), China's current largest fund house by asset size, has cut short its fundraising effort for its latest index fund linked to the CSI300 after collecting around Rmb20 billion ($2.93 billion) in just three days. That tops an earlier record high set by Changsheng Asset Management when it raised Rmb10 billion ($1.46 billion) for its fund.
ChinaAMC CEO Fan Yonghong says the fund has the capacity to take in up to Rmb50 billion ($7.32 billion), but the fund house is happy to cap the asset size at the current level.
Fan notes that ChinaAMC wants to ensure the quality of its products rather than engage in a blind pursuit of scale. (See the coming issue of <i>AsianInvestor</i> magazine, in which Fan outlines his visions for ChinaAMC's development, as the fund house's asset size already along the same lines of that of regional players).
The company will adopt a similar focus for index-based strategies for its second QDII offering.
ChinaAMC's CSI300 fund is the fourth of its kind to appear in the market this year. In the first half of 2009, three other fund houses including Penghua, China Southern and ICBC Credit Suisse also launched similar offerings.
All four funds are designed to be passively managed, tracking movements of the CSI300 index. There appears to be little differentiation in product design or portfolio execution among the four funds, except for the fund houses' respective abilities to control tracking errors.
In terms of asset gathering, brand recognition has played a key role.
ChinaAMC's lastest record-busting effort also highlights the feverish demand for index-based products now driving China's fund markets.
Investors have been piling into passively managed offerings because they felt they have been let down by active managers' failure to capture the strong rallies in A-shares that started from the third quarter of last year. Managers have underperformed indices in China as most had been holding outsized cash positions during the bear rallies.
The China Securities Regulatory Commission is also said to have been favouring passive products over active products for reasons that include transparency and liquidity.
The trend was first started by institutional investors in China that were desperate to move back into equities; and later picked up by retail investors.
ICBC is the custodian to ChinaAMC's latest fund. Tian Yuan Law Firm is its legal advisor, and PWC is its appointed fund accountant.