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After 2.5 years, BEA Union fund gets MRF nod

The prolonged approval process for northbound funds via the Mutual Recognition of Funds (MRF) scheme will not deter BEA Union Investment Management from launching products via the fund passporting programme, the firm's CEO Eleanor Wan told FSA.
After 2.5 years, BEA Union fund gets MRF nod
Eleanor Wan, BEA Union Investment

BEA Union Investment Management was granted permission to sell its Asia Pacific Multi Income (APM) Fund to investors on the mainland, two months after the firm obtained a similar approval for its Asian fixed-income fund. The review by the China Securities Regulatory Commission (CSRC) took approximately 2.5 years in both cases.

BEA Union, a Hong Kong-Germany joint venture, was among the first batch of firms to apply for the approval to sell funds on the mainland via the MRF scheme back in the summer of 2015. It filed for he registration of the APM fund in September 2015. The process took 29 months to complete, although the CSRC states the process can take as little as six months. It took the firm 28 months to obtain the approval for the earlier application, when came in December last year.

To date, there are still 10 other pending applications for northbound fund distribution under the MRF scheme. They were filed as early as July 2015, according to CSRC’s records on 24 February. The most recent application was submitted by JPMorgan Funds (Asia) for its Global Bond Opportunities Fund (MRF), on 16 February 2018. The records show that it is the only new application made since September 2016.

Upbeat on China

Despite the long processing of MRF approvals, Wan remains positive about long-term potential in China’s fund industry. “The market has been in the long-term business strategy for BEA Union,” Wan told FSA. “One of the opportunities we have seen is that the authority has allowed the domestic pension funds to purchase northbound fund products.”

The firm’s newly approved APM fund has $588m of AUM, exceeding the minimum requirement for MRF funds of RMB 200m ($31.54m).

Launched in May 2012, the mixed-asset fund invests primarily in high-yield bonds (60% of its assets) and high-dividend equity across Asia-Pacific (maximum 40%), according to the fund factsheet. As of the end of January, the APM fund’s largest allocation (35.4%) was in Chinese bonds, followed by 11.1% in Australian stocks and 9.5% in Taiwanese stocks, FE data shows.

The mainland agent for BEA Union’s APM fund, responsible for the coordination of northbound sales, will be China Southern Asset Management, according to the firm’s statement.

In December last year, the Hong Kong-Germany joint venture was approved to sell its Asian Bond and Currency Fund on the mainland via the MRF scheme. Its agent was Tianhong Asset Management, China’s biggest fund management firm that manages Yuebao, the world’s largest money-market fund.

“The application for the [APM and the Asian Bond and Currency Fund] was made two years ago. We were unfamiliar with online distribution, which has developed very quickly in China,” she said.”Partnering up with Tianhong AM could offer us an opportunity to sell funds on online platforms while with China Southern AM, we could leverage their extensive network of banks and traditional distribution experience.”

Since the investment markets globally are expected to be more volatile this year, a multi-asset strategy would be an option for investors to diversify among asset classes, Wan said.

In Hong Kong, BOCHK Asset Management yesterday announced the launch of the All Weather Asia-Pacific High Income Fund, which invests in high income opportunities in the Apac region.

MRF-approved northbound funds

Zeal Voyage China Fund
JPMorgan Asian Total Return Bond fund
Hang Seng China H-Share Index Fund
JPMorgan Pacific Securities Fund
BOCHK All Weather China High Yield Bond Fund
Schroders Asian Asset Income Fund
Amundi HK New Generation Asia Pacific Equity Dividend Fund
BOCI-Prudential BOCHK Global Equity Fund
BEA Union Investment Asian Bond and Currency Fund
BEA Union Investment Asia Pacific Multi Income Fund
Source: FSA

Three-year performance of BEA Union Investment Asia Pacific Multi Income Fund versus its sector

Source: FE. In US dollar terms. The fund does not have a benchmark index.

Part of the Mark Allen Group.