Developed by Fortis Haitong Investment Management, the fund is still awaiting regulatory approval. Reportedly, the fund will invest 60 to 95% of its assets in China-traded A shares and Hong Kong-listed H shares, with the remainder in bank deposits and money market instruments.
As part of its plans to direct more of the country’s $3.3 trillion in household savings into the capital markets, China has been encouraging new entrants in its growing $400bn mutual fund industry.
Mutual funds in mainland, at present, invest either in local capital markets or in overseas markets under the so-called Qualified Domestic Institutional Investor (QDII) scheme. The new fund is expected to attract fresh interest in QDII products by offering individuals a means of diversifying their investments at relatively low cost.
Fortis Haitong may use its existing QDII quota to purchase H shares of the fund, which is expected to get China Securities Regulatory Commission approval.
Yue Jiaqing, head of research at Shanghai-based fund consultancy Howbuy, said: “Such a fund offers an investment option that would let investors allocate their assets more efficiently between China and Hong Kong, without having to incur additional fees. But investors could incur bigger losses if the fund is not well managed. It’s a double-edged sword,” reported the news agency.
