Reflecting their concern over continued turbulence in global financial markets, mainland investors had an indifferent response to a newly launched overseas equities-based fund. Beijing-based Yinhua Fund Management said yesterday that it raised 417 million yuan (HK$468.25 million) for its qualified domestic institutional investor fund, only 20.85 per cent of its targeted 2 billion yuan. The lukewarm response to the first QDII fund in three months marks another setback this year for mainland institutions as the domestic stock market wobbles. 'Waning enthusiasm for QDII does not come as a surprise in light of the slowdown in global equities this year,' said Jing Ulrich, JP Morgan's chairman for China equities. 'Most QDII products have fallen below net asset value due to the downturn in global markets.' Sales of the so-called Yinhua Global Core Equity Fund started on April 21 and ended on May 21. It will invest 60 per cent of its assets in foreign mutual funds. QDII funds lost their lustre as mainland investors learned the hard way that they would get burned in weak overseas markets. China Minsheng Banking Corp had to liquidate one QDII fund in March when its net value dropped more than 50 per cent, becoming the first QDII fund to be dissolved. Investors suffered a loss of at least 50,000 yuan each. Beijing made the move to direct cash outflows last year, allowing mutual funds to launch QDII products. The country's first four QDII products launched by fund houses triggered a buying frenzy late last year. The shares were oversubscribed on the first day of sales. Investors showed keen interest in the mutual funds, believing they were astute in finding good investments in Hong Kong where the H shares of dually listed mainland firms traded at a huge discount to their A-share counterparts. However, the funds soon fell victim to the United States credit crisis and the A-share slump, which in turn sent H shares tumbling. This year, Beijing approved more asset managers and securities firms to sell QDII funds, but few launched products in the weakening market. 'I think the timing is still not right to launch a QDII fund,' said Gu Weiyong, the chief investment officer at Ucon Investment Management. 'Buying interest may not come until the end of this year.' In February, ICBC Credit Suisse Asset Management offered its QDII fund, raising 3.15 billion yuan, just 10 per cent of the amount raised by the four similar products last year. To date, not a single brokerage has launched a QDII fund even though almost 10 securities firms have been approved to join the scheme. Banks, fund managers and insurers may invest in overseas listed equities under the QDII scheme.