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Capital Group preps funds for HK retail

The firm has had three emerging market funds approved by the SFC, and is one of several foreign asset managers who are increasingly targeting Hong Kong's retail investor base.

US-based Capital Group has received a greenlight from the Securities and Futures Commission to register three emerging market funds in the SAR.

The funds are: the Emerging Markets Debt Fund, the EM Local Currency Debt Fund and the EM Total Opportunities Fund.

The funds were registered under a different umbrella, Capital International Portfolio, in 2017, according to a Hong Kong-based spokeswoman. Now the funds are registered in a different umbrella, Capital International Funds. In total, Capital Group has 22 SFC-authorised funds, she said.

Although some products are made available to professional investors in Hong Kong without being authorised by the SFC, some banks are only willing to sell SFC-authorised retail funds to professional investors, Rolfe Hayden, a partner at law firm Simmons & Simmons, told FSA recently.

“They could sell unauthorised funds, but they don’t accept them because there is greater regulatory risk.”

Capital Group’s newly-registered funds follow the firm’s launch of a multi-asset fund and a global corporate bond fund earlier this year to retail investors.

“Capital Group will continue to register new funds as part of an effort to provide Asian investors with a suite of products across fixed income, equities and multi-asset strategies,” the spokeswoman said, adding that the firm has discussions with its clients to gauge product demand.

In 2015, the firm announced it would expand in the region. Plans include extending distribution to the retail investor and financial intermediary segments, introducing strategies in these market segments and boosting investment management and research personnel in the region.

AB, GSAM and T Rowe

Other US firms have also aggressively targeted the Hong Kong retail base by getting funds approved by the SFC. The latest was Goldman Sachs Asset Management, which for the first time entered Hong Kong’s retail mutual fund market with seven of its Sicav funds approved by the SFC.

T Rowe Price registered three funds in Hong Kong in August, and now has a total of 13 SFC-authorised funds in the SAR. It started registering funds in 2016 with five products and then five more last year, according to SFC records.

Alliance Bernstein registered four funds in Hong Kong in March and now has a total of 47 SFC-authorised funds. However, the firm registered its first funds with the SFC in 1997, the regulator’s records show.

Part of the Mark Allen Group.