China’s untested funds of funds: fleeting hype or long-term gain?
Chinese regulators are set to grant more approvals for FoF products after giving the green light for the first six funds last month
Mainland investors have subscribed to the first two funds of funds on the A-share market with zest, convinced that the funds could breathe new fire into the securities industry.
But their enthusiasm may have superseded reality as the funds would not have the wizardry to guarantee handsome returns.
China Southern Fund Management raised 3.3 billion yuan (US$497.39 million) for the mainland’s first fund of funds (FoF) for A shares last week, closing with 300 million yuan more than its 3 billion yuan target and 11 days ahead of schedule.
Harvest Fund Management also completed the fundraising for its first FoF earlier than expected, although it has yet to announce the amount of capital netted.
The China Securities Regulatory Commission (CSRC) gave the green light to the first six mutual fund houses to launch FoF products last month, in another step forward to encourage institutional buying. A FoF is essentially a large-size fund that allocates cash to a portfolio of investment funds.
Aside from China Southern and Harvest, the other four money managers are CCB Principal Asset Management, China Asset Management, HFT Investment Management and Manulife Teda Fund Management.