MFC Global Investment Management has launched its first Asia-oriented equity fund targeted at institutional investors, the Institutional Class (I-Class) Greater China Opportunities Fund.
The fund invests in companies listed in Hong Kong, China and Taiwan and targets excess returns over the MSCI Golden Dragon index annualised over a three-year time horizon. At the moment, the fund has a large-cap bias and is overweight in the technology, utility and energy sectors while underweight in the consumer discretionary and materials sectors. It is available worldwide to institutional investors interested in Greater China equities.
The focus on Greater China has to do with the region's role in Asia's future growth. MFC Global expects China equities to become an essential asset class for investors seeking strong growth and a balanced and diversified portfolio of international investments.
"We have leveraged our experience of successfully managing institutional funds around the world to create this product for Greater China," says Michael Dommermuth, Hong Kong-based head of investments for MFC Global Investment Management (Asia), a division of Manulife Asset Management (Hong Kong).
MFC Global is the asset management arm of wealth management services firm Manulife Financial. It manages institutional assets on behalf of pension plans, endowment funds, and financial services companies. It also manages retail funds through Manulife Financial and John Hancock distribution networks as well as for other financial institutions offering mutual funds, separately managed accounts and closed-end funds.
By virtue of Manulife Financial's presence of more than 100 years in Asia, MFC Global has also had a long-term presence in the region. But it started to establish its own business identity in Asia at the turn of this century, targeting mainly retail investors through retail partners.
MFC Global has been far more active in the institutional space in North America [Manulife after all is based in Canada] and has many separately managed accounts for institutional mandates.
Up until recently, the focus in Asia has been the setting up of the business organisation, getting key people in the territories including portfolio managers, analysts and compliance officers to meet its strict risk management framework. Now, MFC Global has 80 investment professionals in 10 countries in Asia. The firm added three new asset management companies at the end of 2008, two through new licenses in Malaysia and Singapore and the acquisition of an asset management company in Taiwan. Worldwide, MFC Global has investment offices in Canada, China, Hong Kong, Indonesia, Japan, Malaysia, Philippines, Singapore, Taiwan, Thailand, the UK, the US, and Vietnam.
With all of MFC Global's Asian business in place, and with its newly expanded equities team in Hong Kong, the fund house is moving forward with its institutional products. The I-Class Greater China Opportunities Fund is the first of a series of institutional funds that MFC Global plans to launch for Asian investments this year. This is a new business strategy for the fund house, which plans to have additional I-Class funds in the future for different geographical areas and perhaps even sectors in Asia.
Institutional funds are longer term in nature, and take more strategic and higher conviction positions with a higher tracking error than retail funds. The minimum investment in these funds is generally $1 million. The fund's fees will be limited to a maximum of 1.1% of assets accrued daily.
"These funds benefit from our philosophy of buying inexpensive stocks with strong earnings growth prospects. The funds will utilise our sophisticated multi-disciplined process for identifying attractive investments," says Tahnoon Pasha, Hong Kong-based regional head of equities for MFC Global Investment Management (Asia).
The need to attract these so-called sticky assets has been highlighted following the surge of redemptions from retail investors across the globe.
The roll out of its first Asia-focused institutional fund is in line with the build-out of the fund house's investment capability in the region. MFC Global has had a relatively lean team in Asia, but had made additions to its regional equity team as recently as January this year.
The Institutional Class Greater China Opportunities Fund builds on MFC Global's experience managing equity funds in Asia for the past 15 years, as well as the track record of its current Greater China desk led by Hong Kong-based Matthew Lee.
Lee leads a nine-strong team in Hong Kong, Shanghai and Taipei as regional head of Greater China equities and has nearly 25 years of investment management experience. Before joining MFC Global, Lee worked at CICC Hong Kong Asset Management as head of equities. He has also worked at RCM/Allianz Global Investors and AllianceBernstein Asset Management (formerly New Alliance Asset Management).