By Chrysant Liu

Guotai Asset Management Co Ltd (Guotai AMC) will launch its Nasdaq-100 index-linked fund on Monday March 22, making it the first QDII Index fund to enter the Mainland market. The launch takes place more than a year after the firm secured the exclusive rights to use the index in China. Total QDII quota available for the product is USD700million (4.8 billion yuan).

Guotai AMC executed the exclusive licensing agreement with Nasdaq OMX Group, Inc, one of the world’s largest exchange companies, to use the Nasdaq-100 index in the development of an exchange traded product in China on February 25, 2009. State Street Bank will be the fund’s global custodian, while China Construction Bank (CCB) will act as its domestic custodian as well as its domestic distributor.

In addition to CCB, Guotai AMC has also enlisted nearly all of the leading domestic commercial banks (eight in total) and some 40 brokerage houses for additional sales support – the firm will devote a full month to its fundraising effort, ending on April 23.

Shelley Yang, the managing director of the company’s international business department, told Asia Asset Management that Guotai AMC will make great efforts with its fundraising for the new fund. Sources say Guotai AMC will also price the product rather aggressively at 80bps.

Index funds have been popular with QDIIs in recent years. China Southern Fund inked a deal with Standard & Poor’s to import the S&P 500 Index for US equities; Penghua Fund Management Co has teamed up with MSCI Barra indices; Fortune SGAM worked with Tokyo stock exchange to launch TOPIX 30 ETF; and China AMC will soon be launching its Hang Seng ETF.