JPMorgan Asian Total Return Bond Fund scrapped the cap on February 8, after limiting a daily subscription amount to RMB 10,000 or $1,000 for all investors in late August, said Henry Tong, JP Morgan Asset Management’s head of China retail business.
“The investment team saw more new bond issuances in the first quarter of this year, so we think it is the right time to remove the subscription cap,” he told FSA.
The JPM fund invests primarily in hard currency Asian bonds, with an aim to achieve both capital growth and dividend income.
Among the five Hong Kong-domiciled mutual funds selling in onshore China, the JPM fund dominated about 90% of the total northbound sales. Its total AUM peaked at $3.9bn at September-end, and fell 19% to $3.2bn at the end of February.
The trend is broadly in line with the overall northbound MRF sales.
Monthly net sales in RMBm
|
|
Northbound |
Southbound |
|
January |
-286.1 |
-2.4 |
|
December |
-410.9 |
-1.3 |
|
November |
-300.7 |
1.7 |
|
October |
94.4 |
-1.0 |
|
September |
561.6 |
15.1 |
|
August |
3,951.4 |
15.4 |
|
Total net sales since January 2016 |
7,486.3 ($1.1bn) |
93.8 ($13.6m) |
Source: State Administration of Foreign Exchange
JPMAM also has another MRF fund selling in the mainland, the JPMorgan Pacific Securities Fund, but with less popularity as equity markets are more volatile than bond markets. The fund invests in Asia-Pacific stocks, including Japan, Australia and New Zealand.
“From our clients’ perspective, when they invest in unfamiliar overseas markets, they opt for stablity. They wish to look for products that offer a stable return [with low risk],” Tong explained.
The firm will resume a relationship with China distributors and roll out roadshows in the mainland to promote the bond fund, but it takes time, he said.
“Although we signed contracts on a national scale, say with a bank, the launch of sales will depend on each branch in different cities, as investors have differing behaviour.
“Last year, we selectively targeted a few cities as we don’t have a big team. Other than first-tier ones such as Beijing, Shanghai, Guangzhou and Shenzhen, we also see high potential in second-tier cities such as Chongqing, Chengdu, Hangzhou, Tianjin, Xiamen, etc.,” he continued.
Online channel distribution
Disbribution channels include foreign banks, domestic banks, brokers, wealth managers, as well as a pure online mutual fund sales platform, Fund123, a subsidiary under Alibaba’s affiliate Ant Financial.
“For non-online channels, the average subscription amount is RMB 200,000 per transaction. Subscriptions from online are much smaller.”
For the online channel, the funds are open for monthly subscriptions only instead of one-off investments, he added. The firm is still exploring this new distribution method.
“From my experience, the high net worth individuals still rely on advice from the relationship managers or advisers. Investors who buy online are a totally different client segment.”
JPMAM plans to file applications for more funds to be sold in onshore China, which will be mainly Asia focused, Tong said, despite the fact that China Securities Regulatory Commission has not approved MRF funds for 1.5 years.
“We will still submit application regardless of the pace of approval by the regulators,” Tong said.
