The Dutch pension asset manager's Asia Pacific head of real estate says his team has just had one of its busiest years ever and that 2021 is looking similarly promising.
According to Michael McCormack, executive director at Shanghai research house Z-Ben Advisors, the clauseÆs history dates back to the industryÆs closed-end era before 2002û2003.
ôTo think back before 2002û2003, when getting a license for a fund was an extremely intricate procedure, you had to have thousands and thousands of safeguards to make it look safe,ö he says.
Funds run by the 'old 10', China's original 10 fund management companies whose founding dates back to 1998-99, are said to be at risk of containing such elements in the fund contract. For example, a call to Bosera Fund Management's customer service centre confirmed it had frozen management fees on its Bosera Value & Growth Fund since early June.
Managers originally incorporated the clause in closed-end fund contracts to help ease product approvals with the industry regulator. ôItÆs a pro-consumer sort of language and made it much more likely to get approved,ö McCormack explains.
Typically, managers would use a formula that incorporates the history of a fundÆs net asset value, its returns over the past 180-day period and a deflator of about 40% to arrive at the artificial NAV. Beyond this, no fees shall be charged. Over the years, the clause has spread into open-ended funds and other fund houses as it has become standard market practice.
Instead of causing fund managers to lose money, it could in fact be saving business. ôA clause like that is actually a useful tool to have, particularly for marketing purposes,ö McCormack says, noting that it can help managers to retain clients that are thinking about dumping funds without having to resort to a price war or to splitting a fundÆs shares to reduce its NAV, two practices discouraged by the China Securities Regulatory Commission.
Regional institutions’ investment managers outperformed their external peers, underlining that they are just as vital as modern asset allocation strategies.
AsianInvestor describes why we chose the top funds across a series of key asset classes.
The RM82.64 billion ($20.6 billion) Malaysian Hajj fund, which recently completed a restructure, is looking to diversify globally but remains cautious of risky assets.
Mega players Nippon Life and Dai-ichi Life are looking for opportunities in higher-yield single-A US corporate bonds, which offer more appealing yields than stagnant domestic offerings.