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BOCI-Prudential HK equity fund to sell under MRF

Another Hong Kong equity fund has been approved for distribution on the mainland under the Mutual Recognition of Funds (MRF) scheme, according to the China Securities Regulatory Commission (CSRC).
BOCI-Prudential HK equity fund to sell under MRF

The latest approval was given to the BOCHK Hong Kong Equity Fund, according to the regulator’s records as of 4 May. The approval will bring the fourth Hong Kong equity-related product to the cross-border fund passporting scheme.

The fund is under BOCI-Prudential Asset Management, which is a joint venture between the Bank of China and UK’s Prudential. Since the fund was launched in 2002, it has been managed by the joint venture’s head of Hong Kong equities Mandy Tong.

The product had assets of HK$2.16bn ($274.78m) at the end of March, according to FE data.

Under the MRF scheme, capital sourced from mainland investors for northbound funds (Hong Kong-domiciled funds sold on the mainland) cannot exceed 50% of the fund’s total assets. Therefore, calculated based on the fund’s assets in March, it is allowed to add a maximum of HK$1.08bn of assets from mainland investors.

In terms of allocation, the fund is heavily exposed to financial companies listed in Hong Kong with 49.8% of assets investing in the sector. It is followed by 12.7% in information technology sector and 10.1% in the property sector.

Top holdings include tech giant Tencent (9.2%), and banks and insurers that operate in both Hong Kong and China, such as HSBC (9.2%), China Construction Bank (9%) and AIA Group (8.9%).

BOCI-Prudential did not reply to FSA‘s requests for additional comments in time for publication.

More approvals

In November 2017, the regulator reportedly suspended the approval for Hong Kong equity retail funds for a short time due to concern over a surging Hong Kong stock market, according to local media.

However, since the beginning of 2018, more funds that invest in stocks listed in the SAR were approved for MRF scheme.

Last month, two Hong Kong equity funds, BOCHK All Weather Hong Kong Equity Fund and the Hang Seng Index Fund, also received the green light to distribute onshore. Both firms filed their applications to the mainland’s regulator on 1 July, 2015.

In addition, CSRC has apparently accelerated the pace of approval for the northbound distribution of funds. A total of six funds have obtained approvals since late December in 2017.

To date, there are seven pending applications for northbound distribution, with the latest being Haitong International Asset Management. Haitong AM is seeking an approval to distribute its Korea equity fund onshore. Among the pending requests, some were filed as early as late July 2015, according to CSRC’s records.

List of 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 Global Equity Fund
BEA Union Investment Asian Bond and Currency Fund
BEA Union Investment Asia Pacific Multi Income Fund
BOCHK All Weather Hong Kong Equity Fund
Hang Seng Index Fund
BOCI-Prudential Hong Kong Equity Fund
Source: FSA



The BOCHK Hong Kong Equity Fund versus the category average

Source: FE. Fund NAV is converted to US dollars for comparison purposes. The fund does not use a specific benchmark.

Part of the Mark Allen Group.