The joint venture, Hang Seng Qianhai Fund Management (HSQF), last week opened for subscription its first product, the Shanghai-Hong Kong-Shenzhen Emerging Industry Selection Mixed Type Fund.
The equity-focused fund allocates at least 55% of its assets in new economy sectors, such as electric cars, biotech and green energy. The managers may also invest in bonds.
The launch comes as demand rises for Shanghai-Hong Kong-Shenzhen-themed funds.
The fund’s lead portfolio manager is Lam Kwok-fai, also the CIO and deputy general manager of the joint venture. Lam used to work in Hang Seng Investment in Hong Kong. Zhang Yong, the co-manager, focuses on A-shares.
The fund is distributing onshore through Hang Seng Bank (China) and Agricultural Bank of China, the nation’s third largest lender by assets.
“At this stage we are hoping to first strengthen the relationship with these two channels and expand gradually after that,” Lee told FSA.
The initial focus is on first tier cities such as Beijing, Shanghai and Guangzhou, as there are more high net worth investors there with a stronger desire to put assets offshore, she added.
Passive product interest
Another area of interest is on passive products, such as index funds, Lee said. Demand for these products were also indicated in an earlier survey.
Distribution channels for index funds and ETFs are very different, as non-listed products, including index funds, are mainly sold through banks, while ETFs rely on brokers, she said.
Lee said Hang Seng’s experience with index funds in Hong Kong will benefit HSQF. She noted Hong Kong-based Hang Seng Investment has 90% of assets under management of index funds, excluding ETFs, in the SAR.
The joint venture might introduce another fund in the coming quarter, “but we are not in a hurry”.
“We started the [HSQF] business from zero,” she said. HSQF, set up in July last year, is 70% owned by Hang Seng Bank. The remaining 30% stake is held by state-owned Qianhai Financial Holdings, which helps interpret government policies or regulatory issues, Lee noted.
The bank prefers setting up a majority stake-owned fund house in the mainland, rather than a strategic investment or an acquisition, as it is easier to oversee the operations and preserve the brand name.
The firm has now about 45 staff in Qianhai and is still hiring, she said.