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China’s Tianhong AM rolls out Vietnam fund

The firm, which manages one of the world’s largest money market funds, is trying to diversify its product range.
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The Tianjin-headquartered firm, which is 51% owned by Ant Financial, has launched this month China’s first QDII product that invests in Vietnam stocks, according to a statement from the firm.

The QDII (qualified domestic institutional investor) scheme allows institutions and fund managers to invest offshore within allowable quotas. Tianhong AM’s quota under the scheme is $200m, according to data from the State Administration of Foreign Exchange.

The firm’s Vietnam equity fund is actively managed and benchmarked against the VN30 Index, which includes the 30 largest stocks listed on the Ho Chi Minh Stock Exchange. During its initial public offering this month, the fund reached its subscription limit of RMB 200m ($28.9m), according to the statement.

FSA sought more information from Tianhong AM, but the firm was not able to reply in time for publication.

The launch of the Vietnam product follows the September 2019 rollout of the firm’s first QDII product, which invests in US equities, according to the firm’s website.

Besides its in-house funds, Tianhong AM is also the distribution partner for several products sold under the Mutual Recognition of Funds (MRF) scheme, including products managed by Hong Kong-based firms Value Partners and BEA Union Investment.

Diversifying away from Yuebao

Tianhong AM is attempting to reduce reliance on its money market fund, Yuebao, by launching non-money market products, including offshore products, according to a Reuters report, quoting Liu Dong, the firm’s head of international business.

Yuebao, which is one of the largest money market funds in the world, accounted for 84% of the firm’s AUM of RMB 1.34trn, the report said.

“We hope that our clients can gradually realise that investing in capital markets is not about simply putting money in money market funds,” Liu said in the report.

The move to introduce other products in the market also comes after Chinese regulators have made moves to rein in the growth of money market funds in recent years. In 2017, for example, Yuebao accounted for 28% of China’s money market fund industry.

Money market funds retain their appeal in China. As of the end of December, money market funds in China accounted for 48% of the country’s RMB 14.76trn retail fund industry, according to data from the Asset Management Association of China.

Part of the Mark Allen Group.