Manulife Funds Direct, the mutual funds division of insurance giant Manulife Financial, is introducing its first Hong Kong-managed and marketed fund. The division was only set up in Hong Kong last summer, as all fund management was previously concentrated in London. Manulife itself has operated in Hong Kong for a century.
The first product to be developed and managed locally is the High Impact Technology Guaranteed Fund. "Guaranteed funds have been a hot seller in Hong Kong," says Ron Otsuki, CEO of the funds arm. "Tech valuations are very low and the markets are full of volatility and risk. We see this as an ideal pairing of a principal guarantee for a volatile sector."
Otsuki says investors will break even if the Nasdaq 100 Index reaches just 50% of its historical average return, which means it must appreciate 10% annually over the fund's life of three and a half years. This is a rough estimate; when speaking with FinanceAsia, the fund had not yet been priced. He says approximately 20% of the fund will be invested in tech stocks, the rest going to bonds and options to protect the capital guarantee. Manulife Funds Direct is aiming to price the product on 15 September.
Raymond Kong, director of business development, says the appetite for guaranteed products in Hong Kong has not abated. "Interest rates remain below 2% and depositors are still looking for alternatives." The fund's size will be capped at $50 million. Subscriptions close on 7 September. There is a HK$50,000 minimum investment amount.
The fund carries a 1.55% management fee, a 0.65% distribution fee, a 0.125% custody fee and a 0.125% fee for the guarantee. There is also a front-end load of 8.575%. All fees are returned to investors at maturity.
Manulife Funds Direct also offers Hong Kong investors a suite of 13 funds managed globally as well as a fund of funds. It sells funds in Singapore as well but does not manage money there.