Italian asset manager Azimut is launching what it claims is the first Ucits III-compliant fund in Europe to offer direct exposure to China’s currency.
Through its Renminbi Opportunities fund, the company is targeting European firms with industrial and commercial relationships in China, providing them with RMB-denominated instruments in which to park their currency.
At the same time it will provide European investors with an opportunity to diversify into a currency that is largely underrepresented in their existing portfolios.
Barclays Capital has taken a similar route, having recently launched a Ucits III RMB fund in Singapore, though its product is open to retail investors.
Azimut's product – an open-ended fund, offering daily liquidity – is a sub-fund of Luxembourg-based multi-fund AZ FUND, run by AZ Fund Management.
It will invest its money collectively in bank deposits in the offshore CNH market in Hong Kong and in RMB-denominated government and corporate bonds issued in the CNH market with a duration of up to five years and time to expiration of more than 12 months.
Given its underlying assets are cash deposits and CNH bonds, the fund’s manager points out it will have limited volatility compared with Chinese equity funds, for instance, which European investors tend to be cautious about.
Initially, the Renminbi Opportunities fund is open to professional investors only with minimum investment of €250,000 ($360,000). But in future it could be opened up to retail clients.
Under the Ucits III structure, the fund is required to have at least 50% of total assets in cash, although its investment manager expects a loosening of this restriction over time.
More than 2,500 companies in Italy have commercial and industrial relationships within China, according to Italian employers’ federation Confindustria.