More Hong Kong fund houses share strategies for MRF
More fund houses have come out to share their plans to participate in the Hong Kong – China mutual recognition fund (MRF) scheme. These include French fund house Amundi, local group Hang Seng (which has a retail banking and an asset management business) and US fund house Principal International.
Xiaofeng Zhong, Amundi’s chief executive for North Asia, said it hopes to be in the second batch of applicants for funds to be approved under the MRF scheme.
At a briefing last Friday, the Hong Kong Securities and Futures Commission said a total of 11 funds from eight fund houses have applied since the scheme kicked off on July 1. The first movers included HSBC, JP Morgan and Invesco as reported.
Amundi aims to distribute a global balanced fund with an Asian bias and a regional equity fund in the mainland market. Amundi will work with its joint venture firm with Agricultural Bank of China, established in 2007, in China.
“We are not part of the first batch but we are interested in this program. We are now working on the application documents,” Zhong said.
Meanwhile, Principal International (Asia) said it has nine Hong Kong domiciled funds across equities, fixed income and money market, of which 2/3 are eligible under the MRF scheme.
“We plan to introduce Asian equity, Hong Kong equity and China equity to the mainland investors through MRF scheme at the end of the year,” said Keith Yuen, regional vice president.
It also plans to introduce funds to Hong Kong through CCB Principal Asset Management (CCBPAM), Principal's joint venture for the mainland established in 2005.
“CCBPAM has a suite of funds across equities and fixed income that are eligible for MRF," said Yuen. "We plan to bring 3-5 of those funds to Hong Kong before the end of the year."
CCBPAM has a wide distribution network in China, not only with China Construction Bank's 14,000+ branches, but with other banks, securities brokers, IFAs and e-platforms. At the end of 2014, CCBPAM was ranked 9 out of 94 mutual fund companies in China with AUM at RMB121.6 billion.
Hang Seng Bank has also been preparing for the MRF initiative. Rosita Lee, head of investment products and advisory business said preparation for selection and distribution of northbound and southbound funds was well underway.
In fact, it has submitted application to the China Securities Regulatory Commission via its partner China Construction Bank (CCB) for the registration and distribution of two funds - Hang Seng Index Fund and Hang Seng China H-share Index Fund – on the mainland.
CCB is the PRC custodian of Hang Seng Bank for QDII and RQFII products. Both entities are expanding their cooperation to leverage the retail network of CCB on the mainland.
Regarding the southbound initiative, Hang Seng Bank is in active discussion with eligible fund houses in selecting mainland funds for distribution to Hong Kong customers upon regulatory approval.
“We attach great importance to adequate operational support and smooth execution throughout the process,” said Lee.