Beijing-based Manulife Teda Fund Management will vote on the liquidation of its Qualified Domestic Institutional Investor (QDII) fund in early September, the first such case for a QDII fund since 2011, according to a report in China's Securities Times newspaper.
The yield of the Manulife Teda fund is -6.33% over the past three years. The size of the fund fell below 50m yuan ($7.8m), the lower limit for QDII funds set by the regulator. According to mainland regulations, a mutual fund must shut down if its size remains below 50m yuan for 60 consecutive days.
The QDII scheme was launched in 2007. It allows capital raised domestically to be invested offshore through a quota system.
By the end of July, the total value of all 97 QDII funds dropped 34.5% from the previous month to 61.1bn yuan, according to the Asset Management Association of China.
More liquidations could be coming as more than 20 QDII funds dropped below 50m yuan at the end of June, with a fund under Hwabao Securities, the smallest of all, standing at around 6m yuan, the Security Times report said. The fund’s initial size was 565m yuan during its launch March 2011.
Added pressure will come from the overseas-domiciled funds soon to be offered via the China-Hong Kong Mutual Fund Recognition scheme. They will be competing with QDII funds for retail investors.