Mirae eyes China hk crossborder scheme

Added 3rd June 2015

Mirae Asset Global Investments intends to distribute its products through the mutual recognition of funds initiative between China and Hong Kong, according to Jung Ho Rhee, chief executive and director of Hong Kong business.

Mirae eyes China hk crossborder scheme

The MRF scheme will allow cross-border selling of funds to retail investors in both markets from 1 July.


To participate, funds must be domiciled in Hong Kong or China. Also, funds must have at least one year of track record with minimum assets worth RMB200m ($32.3m).


Mirae is currently in the process of setting up a Hong Kong-domiciled unit trust to make itself eligible for the MRF, Rhee said in an interview with Fund Selector Asia. 


“We are very keen to distribute through the mutual recognition scheme,” he said. 


The firm, headquartered in Seoul, is planning to import its two flagship products, Mirae Asset Asia Great Consumer Equity Fund and Mirae Asset Asia Sector Leader Equity Fund, into the locally-domiciled trust.


Given the requirement of a one-year track record, Mirae is looking at fund distribution through the MRF sometime in the second half of the year, Rhee said.


“In the meantime, we are working with the Hong Kong regulator so that our funds will be eligible for the scheme.”


He believes Chinese investors will allocate a substantial portion of their money offshore, particularly to get exposure to Asia. “Chinese investors will likely look at non-Chinese markets.”


Depending on mainland investor appetite, the firm may offer another product, the Mirae Asset GEM Sector Leader Equity Fund, through the MRF initiative.


He said the announcement of the MRF launch date was unexpected. “There are some ambiguities,” he said, adding that he believes regulators will resolve any snags in implementation. 


Meanwhile, the firm has received permission from the Luxembourg regulator, the Commission de Surveillance du Secteur Financier, for its UCITS funds to trade through the Stock Connect.


It already has Qualified Foreign Institutional and the Renminbi Qualified Foreign Institutional Investor licenses. 

Regional plans

In Asia, Mirae is planning a Singapore office to expand its sales team and is considering registering funds in the city state. 


Currently, products are distributed through private banks and are only for professional investors in Singapore. 


The firm also has plans to launch a multi-asset product, which would be manufactured and managed in Hong Kong but will be distributed across Asia, the US and Europe.


Further pan-Asia plans involve expanding the sales team in Australia and Southeast Asia.


“We are quite comfortable on the investment side. But in terms of distribution, we are actively adding more people.”


The firm distributes 14 of its UCITS-compliant Luxembourg-domiciled SICAV funds across Asia and Europe, Rhee said.


Mirae also has a global ETF business with $10bn in AUM under the Horizon brand name. In Hong Kong, it manages 14 ETFs.


Rhee said the growing ETF business is presenting a challenge. As the passive side expands, it could threaten the business on the active side.


Mirae's active investment business is top priority because it differentiates the firm "through a research-driven, bottom-up and benchmark-agnostic investment approach", he said.

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