CITIC Securities yesterday announced a plan to set up a 5 billion yuan (US$603.8 million) investment fund, the second such product promoted in the country since regulators gave several pilot securities firms the green light to develop innovative products.

The company, also the first securities house to float shares, plans to make the new project an open-ended and low-risk one, with investments in monetary market tools, bonds and A shares and trusts, according to a notice issued yesterday by the company.

The project, estimated to be worth 5 billion yuan (US$603.8 million), had just been approved by the company's board, the notice said.

But CITIC did not reveal when the sale would take place, as it is awaiting regulatory approval.

As designed, the fund will put as much as 80 per cent of the managed assets in financial investment tools with comparatively stable yields, including treasury bonds, financial bonds, central bank bills, deposits and corporate bonds with an AAA rating. A shares and convertible bonds in initial offerings are also investment targets.

The remaining 20 per cent of the assets will be invested in products with bigger exposure, such as equity funds and stocks with good liquidity.

CITIC Securities itself will also make some investment in the project, the notice said.

Last month, Shanghai-based Everbright Securities announced a similar asset management project and submitted its proposal to the China Securities Regulatory Commission (CSRC).

The company, together with CITIC Securities and China International Capital Corp, was chosen by CSRC as the first batch of pilot securities houses to promote innovation.

The pilot programme is aimed to encourage the top performers to seek new businesses and gradually build up the competitiveness of the overall industry.

"We are still waiting for the approval of CSRC on the new project," a spokesman for Everbright Securities said yesterday.

But the project, different from the mutual funds sold by fund management companies to the public investor, should be sold to a limited group of investors, either institutions or individuals, through private placement, he said.

CSRC has required the securities firms to be prudent with their asset management projects. Exaggeration of returns or public advertising are prohibited.

To ensure standard practice, it even stopped reviewing application of such products last May, till it set up new standards in the aspect recently.