The OFC structure is an initiative to strengthen Hong Kong’s position as a fund domicile and full-service asset and wealth management centre.
“We are proactively responding to the favourable government policy to promote the city to be the next investment fund hub, alongside Luxembourg and Ireland. We launched the first actively managed OFC fund last year,” Eleanor Wan, chief executive of BEA Union Investment, said in a statement.
The affected unit trusts are under the umbrella of BEA Union Investment Series, namely BEA Union Investment Asia Pacific Flexi Allocation Fund, BEA Union Investment Global Flexi Allocation Fund, BEA Union Investment China Gateway Fund, BEA Union Investment China Phoenix Fund and BEA Union Investment RMB Core Bond Fund.
From 30 September 2021 onwards, the five funds have been re-categorised under the BU Investment Series OFC and their names are updated to: BU Asia Pacific Flexi Allocation Fund, BU Global Flexi Allocation Fund, BU China Gateway Fund, BU China Phoenix Fund and BU RMB Core Bond Fund.
OFC funds authorised by the Securities and Futures Commission are eligible for distribution under the cross-boundary wealth management connect scheme (WMC) in the Guangdong- Hong Kong- Macau Greater Bay Area.
Hence, eligible funds are allowed to reach out to mainland investors through this channel, providing more options for investment, according to BEA Union Investment.
Promoting OTC structure
“We believe that more OFC funds will be incorporated to capture the opportunities from the wealth management connect scheme and the competitiveness of the whole value chain in the fund industry in Hong Kong will be enhanced,” said Wan.
The OFC investment vehicle is an open-ended fund in corporate form domiciled in Hong Kong, which is a separate legal entity that has a board of directors and is able to contract and hold assets in its own name. In contrast, unit trusts have a trustee that is required to hold assets.
“The OFC is a game-changer for Hong Kong’s fund management industry,” Alwyn Li, partner of Deacons, legal counsel to BEA Union Investment in its fund development work, said.
“With the backing of financial and tax incentives from the government, in addition to opportunities granted by the newly-launched WMC scheme, we are seeing strong demand for the OFC structure from fund managers and investors,” he added.
BEA Union Investment is a joint venture formed in 2007 between the Bank of East Asia and Union Asset Management Holding AG of Germany. As of 30 June 2021, it holds AUM and advisory of $13.7bn, according to the firm.
