FORTIS Haitong Investment Management Co said yesterday its proposed overseas-invested equity fund will target China-centered shares listed in Hong Kong and the United States to tap these companies' robust growth.
The joint venture, partly held by Belgium's Fortis, will use assets in the fund to buy into quality companies that derive most of their growth from the Chinese market, according to a corporate release.
The new fund under the Qualified Domestic Institutional Investor scheme will seek investment opportunities in medium-sized overseas-listed companies, chief investment officer Chen Hong said.
The nation's stock regulator in June expanded a QDII scheme to all brokers and fund ventures after initially limiting the business to banks and a single fund firm last year.
All the four recent QDII equity funds, which were launched in September and October after the deregulation, were oversubscribed on their first day of sales and each of them raised US$4 billion, the upper limit set by the regulator.
JP Morgan's mainland fund venture received orders from investors worth more than 100 billion yuan (US$13.3 billion) on the day of the sale, a mainland record for subscriptions to a single mutual fund.
At least four more fund companies, including Fortis Haitong, are set to launch similar products in the fourth quarter of this year.
Since February, Fortis Haitong has been serving as the investment adviser for Hanwha Dream and Green Fund, a fund launched by South Korea's Hanwha Investment Trust Management, to invest in overseas-listed Chinese firms.
Over a period of seven months, the fund's combined return had hit 82 percent by the end of September, outpacing the benchmark index by 18 percentage points, according to a release by Fortis Haitong.
Chen noted that overseas mature markets focus more closely on corporate governance and it's impossible for a firm's stock price to jump ahead of its fundamentals for a long period. Small-cap firms usually have lower valuations than bigger ones, he said.
"It will take time for mainland investors to get acquainted with the overseas markets as they are now accustomed to the high valuations in the domestic market," Chen said.