‘Fund of funds’ seen as the saviours of China’s mutual fund sector
CSRC approves first batch of six asset management firms able to launch FOFs last week, with some suggesting as much as US$121.5bn could now be ploughed into such products
China’s mutual fund industry may be charting a new course in future, into the fund of funds (FOFs) market, echoing the regulator’s calls to increase institutional buying on what remains the country’s largely arcane stock market.
An FOF is essentially one mammoth fund holding a portfolio of other investment funds – but it’s now being viewed as a potential game-changer in the mainland’s mutual fund sector, after enjoying 19 years of sizzling growth around the world.
The China Securities Regulatory Commission (CSRC) approved the first batch of six asset management firms able to launch FOF products last week, and market watchers now expect a floodgate of investment into the new investment product class, with some suggesting as much as 800 billion yuan (US$121.5 billion) could be ploughed into such products.
The first six houses – CCB Principal Asset Management, China Asset Management, Harvest Fund Management, China Southern Fund Management, HFT Investment Management and Manulife Teda Fund Management – were given the green light to launch the new FOFs within six months.
And some 30 fund management firms have now filed applications with the CSRC for launches of their own.
