The Hong Kong-based firm plans to launch new China and Asia-focused equity and fixed income UCITs funds in overseas markets at the beginning of next year, said Dale, who joined HGI in September from Mirae Asset Management. He did not reveal details about the new products.
So far Harvest has eight retail mutual funds and three ETFs selling in the SAR, and focuses on China and Asian equity and fixed income products. The firm also has ETFs listed in Europe and the US under the Deutsche X-trackers Harvest brand name.
Harvest Fund Management, the parent firm based in Beijing, has $97bn in total assets under management, including $6bn under the overseas arm, mostly from mainland-based investors. Deutsche Bank, which owns 30% of Harvest, is responsible for the overseas distribution of the products, he said.
China equities demand
Investor demand for Asia and China exposure in general has been comparatively low this year in the context of the previous five years, Dale noted.
Interest in China bonds, for example, may be dampened by the victory of Donald Trump, he said. It has already triggered rising expectations of a quicker interest rate tightening cycle, which is bad news for fixed income.
“What we have to look at is how we can build marketshare, on the assumption that hopefully the demand is going to return. If it doesn’t we will have to take marketshare from existing players.”
Chinese equities, however, hold more promise.
“We are seeing interest from long-term institutional money coming back [to China]. Those are from Asian, European and Australian investors,” who are more interested in either H-shares, or a mix of Chinese equities listed in the mainland, Hong Kong and the US.
For ETFs in Hong Kong, “demand has been pretty flat. We are looking very hard at what we should be doing with ETF products in Hong Kong”, he said.
It’s still unclear how the ETF market will look five to ten years from now, he said. This year there have been de-listings in the SAR after some ETFs failed to gather assets.
“You have to be careful not just to replicate what is already a highly successful instrument listed somewhere else”, such as those listed in the US with abundant liquidity, he said.
The firm is also interested in the ETF Connect, which is expected to be launched later this year as an extension of the Shenzhen-Hong Kong Stock Connect.
For instance, Dale said the Harvest CSI 300 ETF listed in Shenzhen could be a potential product with RMB 16.7bn ($2.23bn) of assets under managerment.
To compare, the largest ETF in the SAR tracking the same benchmark CSI 300 is ChinaAMC CSI 300 Index ETF with RMB 9.88bn of AUM, according to data from the Hong Kong Stock Exchange.
However, the firm does not plan to launch products ahead of the ETF Connect scheme unless more details such as product eligibility for participation in the scheme are clarified, he added.
Harvest Global has offices in Hong Kong, London and New York. Dale said the firm is planning to expand into other Asian markets including Japan, Korea, Taiwan, Southeast Asia and Australia. Hiring for sales positions is underway, with the most recent hire to cover the Japan and Korea markets.