China's first open-ended investment fund may be launched as early as August.
The fund is expected to be oversubscribed several times on the mainland, which has amassed huge bank savings while offering very few tools for investors, said Blair Pickerell, chairman of JF Funds, which is part of JF Asset Management.
JF Asset Management is a partner of the fund manager, Huaan Fund Management Co of Shanghai.
Huaan has received a license to launch the fund, but the timing will be set by China Securities Regulatory Committee (CSRC), the market watchdog, Pickerell said Thursday.
With the fifth system test done Thursday, Huaan is technically ready for the fund launch, Pickerell said at a press briefing.
However, it remained to be decided by CSRC and other parties involved how to allocate the fund when and if it is oversubscribed, he said.
"They want a method that is fair and that does not create social instability," Pickerell said.
Called Huaan Innovation Fund, it will be capped at 5 billion yuan (US$602.409 million), with the minimum investment being 10,000 yuan (US$1,204). The minimum is close to the figure in the US or Europe but will find adequate investors, given the increasing wealth of mainland people, he said.
The fund will be allowed to invest only in mainland yuan-dominated A-shares and domestic bonds. Pickerell said about 80 percent of the fund will be invested in equities and 20 percent in bonds.
Redemption will not be permitted until three months after the launch of the fund.
The fund will be distributed in 13 mainland cities by Huaan to institutional investors, who will account for 40 percent of the fund, and Banks of Communications to individual investors, who will make up 60 percent, Pickerell said.
JF Asset Management's global parent, JP Morgan Fleming Asset Management, signed a memorandum of understanding with Huaan on forming a fund management joint venture when the mainland's laws and regulations ease.
The foreign stake limit has not been officially announced by the mainland authorities, but it has been widely reported that once China joins WTO, foreign investors will be allowed to take a 33 percent stake in a fund management company, and three years later the limit will be lifted to 49 percent.
(China Daily 07/15/2001）
