The MRF is a cross-border fund passporting scheme between the mainland and Hong Kong. As of today, there are a total of 14 Hong Kong-domiciled (northbound) funds that are approved for sale on the mainland.
Among MRF-approved funds as well as products pending approval, bond products cover only China, Asia and Asia-Pacific strategies.
The new applicant, the Bosera Aberdeen Standard Emerging Opportunities Bond Fund, is the first to invest purely in global emerging market bonds.
On 7 August, the firms submitted the MRF application documents to the China Securities Regulatory Commission (CSRC).
The EM bond product is co-managed by Bosera Asset Management International and Aberdeen Standard Investments and has been for sale in Hong Kong since inception in 2016. The fund had $56m in AUM at the end of July, according to FE Analytics.
According to MRF regulations, if the product is approved for sale, it can gather a maximum of $56m in additional assets from domestic investors on the mainland.
Bosera/ASI fund’s top 5 holdings
| Yield | Maturity date | Weighting | |
|
Arab Republic of Egypt |
6.125% | 31/01/2022 | 3.0% |
| Republic of Senegal | 8.75% | 13/5/2021 |
2.4% |
|
Republic of Serbia |
7.25% | 28/09/2021 | 2.4% |
| Republic of Vietnam | 6.75% | 29/01/2020 |
2.3% |
|
Republic of Sri Lanka |
5.75% | 18/1/2022 |
2.2% |
Source: Fund factsheet
MRF Slowdown
The MRF has had lackluster sales of northbound funds, which have continued through eight consecutive months of net outflow since December last year, according to data of China’s State Administration of Foreign Exchange.
Year-to-date, northbound funds had a total net outflow of RMB 3.06bn.
As of 31 August, there are 11 pending MRF applications, four of which were filed by Haitong International Asset Management, the subsidiary of the Hong-Kong listed Haitong International Securities.
The firm is still waiting for CSRC approval of its first MRF application filed in March 2016 to distribute the Global RMB Fixed Income Fund. In March 2018, Haitong filed three additional applications for its Korea Equity Investment Fund, Asian High Yield Bond Fund and Hong Kong Equity Investment Fund.
Other asset managers that are waiting for CSRC approval include JP Morgan Asset Management, HSBC Global Asset Management and Value Partners.
Bosera/ASI fund performance since inception in 2016
