E Fund and China AMC granted additional RQFII quota
08 January 2013
News, China, Hong Kong
By Hui Ching-hoo
E Fund and China AMC have both reportedly received an additional quota of RMB 800 million (US$127 million) for their RQFII bond funds from China’s State Administration of Foreign Exchange (SAFE).
The increments raise the size of the E Fund RMB Fixed Income Fund and the China AMC Select RMB Bond Fund to RMB1.9 billion and RMB 2 billion respectively, according to a report from Securities Times on Tuesday (January 8).
Despite the fact that the second phase of the RQFII scheme was not started until the middle of last year, with the availability of ETF products, a few RQFII institutions including E Fund, China, and Harvest are still looking for additional quotas for their RQFII bond funds on top of the recently awarded ones, as previously awarded ones are now fully subscribed.
Fullgoal Asset Management managing director Michael Chow tells Asia Asset Management that the quota approvals do not show that most investors currently prefer fixed income products. In fact, demand for RQFII bond funds has been mixed overall due to diverse performance trends in the fixed income sector. While some funds have languished, others have outperformed and seen demand increase substantially.
The E Fund RMB Fixed Income Fund topped its peers with an accumulated return of 5.45% at the end of 2012; the China AMC Select RMB Bond Fund bond fund gave back 4.32%, while some of their counterparts recorded losses.
Mr. Chow adds: “Fullgoal was the latecomer when it came to setting up a Hong Kong office. The firm is looking to secure an allocation from the so-called third phase of the RQFII scheme, when a total quota of RMB 200 billion is expected to be made available.”
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