HSBC launches fund into slowing MRF market

Added 27th June 2016

HSBC GAM launched a southbound multi-asset fund managed by joint venture HSBC Jintrust, but sales of southbound funds through the MRF have been weakening.

HSBC launches fund into slowing MRF market

HSBC Jintrust is a mainland joint venture between HSBC and Shanxi Trust Corp. The HSBC Jintrust Dynamic Strategy Mixed Securities Investment Fund invests in stocks, bonds and other mainland assets.

It is for sale through the Mutual Recognition of Funds scheme.

According to HSBC GAM, "The fund has the flexibility to adjust its positions between bonds and equities (30 - 95% of the fund’s net assets in equities) during different market cycles when aiming to achieve higher potential returns."

Slower going south

However, the launch comes at a time when the sales gap between the MRF's northbound and southbound funds is widening.

Monthly net sales of Hong Kong funds for China's onshore investors (northbound) topped RMB 707.7m ($105.6m) in May, versus a mere RMB 1.1m on the opposite southbound flows under the MRF scheme.

Accumulated sales of the four northbound Hong Kong funds since the beginning of this year reached RMB 2.1bn, 36 times higher than the roughly 20 mainland funds selling in the SAR, according to the latest data from State Administration of Foreign Exchange.

Northbound fund sales are growing, but at a slower rate over the past two months.

The JP Morgan Asian Total Return Bond Fund has so far captured about 90% of the cumulative sales, thanks to a non-China bond focus and strong distribution plan

By comparison, southbound mainland funds selling in Hong Kong recorded their weakest sales last month, attracting RMB 1.1m in May compared to RMB 10.2m in April and 7.4m in March.

Still, mainland asset managers have been actively launching MRF products in the SAR. CSOP’s China Southern Selected Value Mixed Securities Investment Fund, three funds from Bosera and two from CCB Principal have started to sell in this month.

So far six Hong Kong funds and 37 mainland funds have been approved under the scheme.

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