MRF approval for two more China funds

Added 31st December 2015

Invesco-Great Wall and GF International have had China onshore funds approved by the SFC for sale in Hong Kong.

MRF approval for two more China funds

The Invesco Great Wall Core Competence Mixed Securities Fund can now be offered to the Hong Kong public through the Mutual Recognition of Funds scheme, the firm said.

The product invests in quality mainland enterprises in China “to share the sustainable growth of the enterprises amid economic growth in the PRC”, Invesco said.

“While A-share valuations have come down, we believe China’s long-term growth story remains intact,” said Terry Pan, CEO of Greater China, Singapore and Korea. “Through the options available via MRF, investors are able to explore high quality onshore Chinese investment vehicles in Hong Kong.”

The Securities and Futures Commission also approved GF International Investment Management’s mixed asset fund in the second batch of onshore Chinese funds that can be sold in Hong Kong under the MRF.

The GF Juyou Mixed Assets Fund, aimed at Hong Kong retail investors, follows a bottom-up stock selection approach based on fundamental research to buy and hold the equities of listed companies “with high investment value, and ample growth and development potentials”, the firm said.

It mainly invests in the manufacturing, leasing and business services, software and technology services, and real estate sectors.

The fund had assets of RMB 260m on September 30 and from January to end-December 2015 had a 42% return.

Earlier in December, GF had another fund approved for southbound sale, FSA reported earlier.

China best ideas

In September, Morningstar chose the Invesco-Great Wall product as one of its “China best ideas” selections.

According to the research firm, “the fund’s consistent application of an investment process that focuses on identifying stocks with a high margin of safety.

Portfolio manager Guang Yu has four years of investment experience and has managed this fund since December 2011.

“Yu adopts a bottom-up approach to stock selection that focuses on stocks that trade below their intrinsic value. He prefers promising companies that have core competencies, great business models, and excellent management teams, such as the fund's top-10 holding, Gree Electric Appliances.

“The fund manager tends to be patient, holding stocks for the long term, and believes that the value of a company will ultimately be reflected in its share price.”

The firm said the manager has done well managing downside risks. The fund’s two- and three-year annualised returns were 49% and 40%, respectively, which outpaced the Morningstar China Large Cap benchmark by 7.8% and 22.2% and its category average by 4.1% and 11.25%, respectively.

Morningstar recommended the fund as a long-term core holding for equity investors.

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