New mutual fund approvals in China up 50% year-on-year in January

14 February 2014   Category: News, Asia, China, Global   By Hui Ching-hoo

China Securities Regulatory Commission (CSRC) has been speeding up the approval process for mutual funds. The regulatory watchdog granted a total of 45 new fund products in January, an increase of 50% from 30 in the same period a year earlier. 

Around 62.2% of the approved products in January were hybrid funds, sector ETFs, and money market funds. This contrasts starkly to the first half of last year when more than 80% of the approved funds were fixed income products.

Of the newly approved funds in January, eight were ETFs; four of which are managed by China Southern Asset Management: the China Southern CSI 500 Medical and Health ETF, the China Southern CSI 500 Materials ETF, the China Southern CSI 500 Information Technology ETF, and the China Southern CSI 500 Industrial ETF. The other four are part of Gfund Management’s CSI ETF series.     

An analyst from Z-Ben Advisors told Asia Asset Management that many asset managers elected to launch highly liquid short-term bond funds early last year in an effort to prop up their AUM.

“However, the local bond market did not perform well, which resulted in significant redemptions, especially in the second quarter,” said the analyst. “We anticipate a less aggressive approach from fund managers in terms of new product launches this year. It is more likely that they will place more emphasis on strengthening the returns of their existing products, which may be bolstered by the growth in online fund trading platforms. We expect sector-focussed ETFs and money market funds to remain popular throughout 2014.”