China's Hua An Fund Management raised US$196.6 million in its first product to invest overseas, which analysts said was less than expected as mainland investors are shy of putting money in the unfamiliar foreign markets. The amount raised was less than half of the US$500 million quota Hua An was granted in September under the qualified domestic institutional investor (QDII) scheme, which allows designated firms to invest overseas despite the country's capital control. 'The money raised is a little bit less than I expected,' said a mainland fund researcher. 'It's a rare product in the domestic fund market; it should have been more attractive.' Hua An's first QDII fund opened for subscription for about a month through October 20, attracting 16,652 investors. Although the response was weaker than expected, it was the largest QDII fund in recent months. 'Investors' slow reaction to QDII products is rational and reasonable,' said Zuo Xiaolei, chief economist at Galaxy Securities. 'Domestic investors are almost blind when investing in the overseas market; they know very little about the markets outside China - even Hua An Fund Management itself doesn't know much.' QDII is part of the mainland government's effort to release the country's mounting capital inflow and ease pressure on its currency. Domestic banks and fund managers have now received combined quotas to invest US$12.6 billion overseas under the QDII scheme. 'Products such as these need to have appropriate overseas investment advisers, domestic and overseas asset custodians,' Ms Zuo said. 'It all takes time and caution is needed.' Lehman Brothers is the Hua An's adviser on its fund product. Six fund managers and analysts from Lehman Brothers joined the fund's management team, with the other five managers from Hua An.
