Asia continues to lag other regions for integrating ESG principles with investing; better data and stronger regulatory requirements will help institutional investors, market observers say.
Since September, four funds have been launched by Chinese fund houses under the Qualified Domestic Institutional Investor program. Combined, these funds raised Rmb252.99 billion ($33.71 billion) in the space of just one month.
The China Securities Regulatory Commission (CSRC) has been actively encouraging retail investors to allocate capital to overseas markets through approved fund houses in the mainland. No new quotas have been issued for funds that invest locally and the hugely anticipated æthough-trainÆ program, which allows individual investors to invest in Hong Kong stock market, has been put on hold.
Previously, three other QDII funds were launched by China Southern Fund Management, China Asset Management and Harvest Fund Management. China SouthernÆs maiden launch, advised by Mellon, raised Rmb49.1 billion. ChinaAMC, with T. Rowe Price as foreign advisor, raised Rmb30.1 billion. DeutscheÆs JV, Harvest, raised Rmb73.79 billion.
Demand is quickly outstripping supply. The highest overseas investment quota approved for these fund houses so far has been $5 billion (RMB37.63 billion).
This latest fund from CIFM will be focused on Asia ex-Japan equities. Around 60-100% of the portfolio will be invested in Australia, South Korea, Hong Kong, Singapore and India. Depending on market volatility, up to 40% will be held in cash, bonds and other unspecified tools.
Avelyn Yang, a Taiwan national, will manage the portfolio. She was previously JPMorganÆs investment manager for an Asian fund and a Taiwan growth fund. CIFM shares its research platform with JPMorgan Asset ManagementÆs operations across Asia.
Yang says CIFM is still keen on the 30-40% valuation discount between A and H shares.
Raw materials in Australia, Korean ship builders, and producers of electricity generators are likely themes to her investments.
Minimum investment for the fund is Rmb10,000. The fund has a subscription fee of 1.5%, redemption fee of 0.5% and administration fee of 1.8%. CIFM has enlisted ICBC, Bank of China, Bank of Communications, China Merchant Bank, Shanghai Pudong Development Bank, Everbright Bank, Shenzhen Development Bank, Bank of Shanghai and 17 securities companies for distribution.
Bank of New York, in partnership with ICBC will act as this fundÆs custodian overseas and in China. Bank of New York vice president Andrew Gordon notes China is a very important strategic base for the bankÆs development in North Asia.
JPMorgan Asset Management and Shanghai International Trust & Investments owns 49% and 51% of CIFM, respectively As of August 31, CIFM managed around Rmb70 billion for 3 million accounts in China. It is one of the external asset managers licensed to invest on behalf of ChinaÆs Rmb282.8 billion ($37.7 billion) National Social Security Fund.
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