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Equity products dominate HK fund industry

Added 9th December 2014

Hong Kongs fund industry registered a 7.5% rise in net inflows during the first nine months of the year with equity funds dominating more than half of the funds sales, according to Hong Kong Investment Funds Association.

Equity products dominate HK fund industry

During January-September, the industry registered gross sales of $63.2bn, up by 12% over a similar period last year. The net sales were at $11.5bn. 

Gross inflows in equity funds reached $29.4bn, representing an increase of 94% over the same period of last year. Net inflows also soared to $6.3bn from $2.9bn.  

Investors’ interest was particularly evident for income-oriented funds investing in fixed income securities and equities, the industry association said. 

On a net basis, inflows into balanced funds had plunged to $3.6bn from $9.7bn.  Bond funds had fared better, attracting robust net inflows of $1.6bn, reversing the trend of net outflows of about $2 billion, a year ago.

Within the equity funds category, European regional equity funds, international equity funds and Asia regional (excluding Japan) equity funds took the leads. On the fixed income side, high yield bonds and Asian bond funds were sought by investors.

“The healthy growth in gross and net retail fund sales this year reflects continuous improvement in retail investor sentiment under the backdrop of stable recovery of global economy, low inflation and exceptional low interest rate environment, despite uncertainty in geopolitical risk throughout 2014,” Bruno Lee, chairman said.

“While growth in equity funds demand is particularly strong, we continue to see significant demand in income oriented funds investing in fixed income and equity income underlying securities,” Lee added.

Equities lead

Out of the 16 equity categories, eight registered net inflows on a year-to-date basis, with European regional equity funds taking the lead attracting $3.2bn of net inflows. International equity funds and Asia regional (excluding Japan) equity funds followed, raking in $1.9bn and $1.1bn in inflows.

But, the industry body said gross inflows in international equity and European funds had waned in August and September, whereas that in Asia regional (excluding Japan) equity funds had picked up in the third quarter.

Bond funds recover

Out of the six bond fund categories, high yield bond funds came first registering net sales worth $1.8bn, reversing last year’s trend when net outflows were at $569.6m.

However, the industry association highlighted that most inflows in high yield funds were registered in the first half while there were heavy outflows totaling $1.4bn during August and September. 

Asian bond funds secured second position attracting $3.9 bn in gross inflows. It was the only category that managed to consistently register net inflows in the past five months.

Outlook

According to Terry Pan, vice chairman of HKIFA, the fund market in Hong Kong will continue to look attractive in 2015.

“From an investment perspective, the recovery of global economies – whilst they are at different stages – should continue to support a positive investment appetite that mutual funds provide,” Pan said.

Furthermore, capital market developments such as the Hong Kong-Shanghai Stock Connect and the potential Mutual Recognition of Funds between Hong Kong and Mainland China are also supportive of further market development, he added.

HKIFA has 64 fund management companies, managing about 1,200 Securities and Futures Commission-authorized funds with total $1.02trn in assets under management at the end of September 2014.  

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