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Gao Teng AM enters MRF programme

The firm believes that there is strong demand from Chinese investors for Asia fixed income funds.

Hong Kong-based Gao Teng Global Asset Management has filed an application with the China Securities Regulatory Commission (CSRC) to sell the GaoTeng WeFund – GaoTeng Asian Income Fund to mainland investors via the Hong Kong-China Mutual Recognition of Funds (MRF) scheme, according to records from the regulator.

If approved, it will be the firm’s first northbound (Hong Kong-domiciled funds sold in the mainland) MRF fund, CSRC record shows.

“MRF provides a channel for mainland investors to access offshore market. We hope to capitalise on this important cross-border opportunity so that investors in mainland China could further diversify their portfolios,” a Gao Teng spokeswoman told FSA.

The GaoTeng Asian Income Fund is the firm’s first Securities and Futures Commission (SFC)-approved product, which was launched in November 2018.

Managed by Wonnie Chu, the fund primarily invests in debt securities in Asia-Pacific, with at least 50% of its assets in investment grade bonds, the spokeswoman said.

The firm also believes that there is “strong demand” from Chinese investors for Asia-focused fixed income products.

“There are compelling macroeconomic and technical reasons that support Asian fixed income, especially with lower interest rate, weak growth and low inflation to persist due to outbreak of COVID-19,” the spokeswoman said.

Gao Teng manages three other products, according to SFC records. As of the end of June, the firm manages around HK$10bn ($1.29bn) in assets, according to the spokeswoman.

The spokeswoman did not comment whether the firm has plans for the other funds to be on the MRF scheme, however.

Gao Teng is the Hong Kong-based joint venture between internet giant Tencent and Beijing-based Hillhouse Capital Group. Hillhouse has $20bn in AUM and specialises in alternative assets such as hedge funds and private equity investments.

Since the MRF scheme began in 2015, 23 northbound products from 12 firms have been approved by China’s regulator, according to records from the China Securities Regulatory Commission (CSRC).

This year, CSRC approved six funds under the MRF scheme, which include products managed by Amundi, JP Morgan Asset Management, Pictet Asset Management and HSBC Global Asset Management.

Excluding the Gao Teng AM product, six more funds are still awaiting regulatory approval, which include products managed by China Asset Management, Fidelity, E Fund Management, Income Partners and BOCHK Asset Management, according to the latest records from CSRC.

Since the scheme began, mainland investors have poured RMB 16.9bn ($2.43bn) into northbound MRF funds as of the end of June, according to data from China’s State Administration of Foreign Exchange.

Part of Mark Allen.