JP Morgan Asset Management has raised $105 million from investors in Hong Kong for a new mutual fund that invests mainly in mainland A shares.
Ken Tam, CEO at JP Morgan AM unit JF Funds, says that three months ago, he would not have been confident that such a product could succeed. He thinks this new one, called the JF China New Generation Fund, is representative of the kind of product that can now sell: simple and traditional.
The fund was made possible by JP Morgan's winning an additional quota of $75 million from Beijing to invest in China's QFII program. The new fund invests up to 80% in A shares (up to its quota limit) and the remainder in RMB-denominated bonds or cash instruments. The fund therefore offers exposure to China equities, currency appreciation, and also provides some stable income.
"The results show that there is still a market for mutual funds," Tam says, noting that the firm has put a lot of effort recently into investor education efforts. It is positioning the fund as a medium-term investment tool, rather than something to be flipped.
The fund will be managed by members of JF's Greater China team, and supported by research analysts at the firm's mainland funds JV in Shanghai, China International Fund Management.