China’s CSOP claims first with Ucits IV fund launch

Hong Kong subsidiary CSOP Asset Management has launched a Ucits IV fund series in a drive to meet European demand for renminbi and China-themed exposure. It says it aims to sell more publicly available funds to retail and institutional investors globally in an overseas push.

The Luxembourg-registered China Southern Dragon Dynamic series has two long-only sub-funds – a bottom-up China equity strategy and a renminbi credit strategy focusing on CNH corporate bonds.

These new products are targeted at retail and institutional investors in Europe. AsianInvestor understands they are also available to professional investors in Asia on a private basis but are not yet available publicly.

The sub-funds will be managed by research and investment teams from both CSOP Asset Management in Hong Kong and China Southern FMC in Shenzhen.

CSOP was established in 2008 as a joint venture between China Southern FMC (which owns 70%) and Oriental Patron Financial Investments (30%).

Wang Jin, managing director of CSOP Asset Management, tells AsianInvestor: “These are the first self-managed Ucits IV funds set up by a Chinese fund house.

“We want to extend our ‘China Southern’ branded products and services further to enable European investors to gain direct access to Chinese investment expertise.”

Wang concedes that CSOP faces enormous challenges in terms of brand recognition, track record and size of AUM in the face of stiff international competition.

But he adds: “Being global is a common goal of Chinese fund houses and there is no short-cut to reach it. You need to have a product to introduce yourself to global investors. We are willing to be the first under the new Ucits IV to make this bold attempt.”

He stresses that one advantage the firm has is being able to leverage its domestic China equity and fixed income capabilities, noting that China Southern has been invested in the A-share market since 1998. And only this year CSOP launched an RMB bond fund.

“Some high-yield names are not rated, but we will include them in the portfolio as China Southern has an internal credit-rating team to assess bond quality,” he explains.

“Compared with international fund managers, physically being in the market every day enables us to view China’s economy and capital markets from a different perspective.” 

Like many Chinese asset managers in Hong Kong, CSOP manages funds on a private-placement basis. But Wang confirms that it plans to follow its parent’s business model in China by targeting expansion overseas. As such he says CSOP aims to launch more publicly available funds for retail and institutional investors around the world that are eager to gain China exposure.

“We hope to launch more offshore public funds next year, including funds authorised by the Securities & Futures Commission (SFC) in Hong Kong,” Wang notes.

“We will continue to allocate more resources and increase our manpower as managing public funds is more demanding in terms of research, operations and compliance.”