MPF swells managed funds
Contributions to the pension scheme and foreign cash help push asset pool to $1.4 trillion in third year of growth
Total assets managed by the local fund management industry increased for a third successive year to $1.49 trillion last year, thanks to the Mandatory Provident Fund (MPF) compulsory retirement scheme and the popularity of guaranteed funds.
According to the annual survey by the Securities and Futures Commission (SFC) released yesterday, the total fund assets managed was up 0.4 per cent last year from a year earlier.
The survey was carried out among all 185 fund houses registered with the commission.
The SFC said 63 per cent of the money under management, or $932 billion, by Hong Kong fund managers was from overseas investors.
The amount of fund assets invested in the Hong Kong market stood at $739.19 billion, up 11 per cent from a year earlier.
Of that amount, 58.7 per cent was invested in equities, 22.5 per cent in bonds, 8.2 per cent in cash, 0.7 per cent in derivatives and 10 per cent in other instruments.
'The sizable growth in the Hong Kong market could be attributed to growing contributions to MPF schemes, increased investment in SFC-authorised retail funds by Hong Kong investors and increased assets managed on behalf of high net worth individuals,' the SFC said.
The commission said low bank interest rates had been one of the reasons for the increased interest in fund products.
'Hong Kong has a wide variety of investment products to offer and products such as guaranteed funds have generated substantial growth in 2002,' the SFC report said. 'This could be attributed to investors' preference for conservative investment instruments and alternatives to bank deposits in a low interest rate environment.'
Many banks and fund companies have launched guaranteed fund products that provide guaranteed returns for investments locked in for several years.
The SFC said the introduction of the MPF in 2000 had increased the awareness of the Hong Kong fund industry.
Money under management from Hong Kong investors grew 23 per cent last year to $558 billion.
Meanwhile, 36 fund houses had their Asian headquarters in Hong Kong, up from 34 in 2001.
Alexa Lam, the SFC's executive director of intermediaries and investment products, said: 'The results of the survey suggest that Hong Kong has maintained its position as a major fund management centre in Asia, attracting overseas fund management as well as increasing the amount of asset sources from, managed out of, advised in, and invested in Hong Kong.'
She said the SFC would continue to foster an environment conducive to an open and effective market for the fund industry.
However, the industry faces competitive pressure from Singapore, which has been quicker to promote real estate investment trusts (REITs).
But an SFC source said last week that the commission would announce the regulatory framework for REIT issues this week and immediately accept suitable applications.
