Northbound funds (Hong Kong-domiciled funds) sold in the mainland via the Hong Kong-China Mutual Recognition of Funds (MRF) scheme have attracted RMB 747.04m ($107.1m) in the first half of this year, according to the latest data from China’s State Administration of Foreign Exchange (Safe).
The bulk of the inflows came from April, when domestic investors poured RMB 2.28bn into northbound funds. However, investors have slowly redeemed from such products, with May and June collectively having net redemptions of RMB 625.81m, the data shows.
Northbound fund flows
| Monthly net flows in RMB | Total net inflows in RMB* since the scheme started | |
| Jan-20 | (407.1m) | 15.78bn |
| Feb-20 | 1.03bn | 16.8bn |
| Mar-20 | (1.53bn) | 15.3bn |
| Apr-20 | 2.28bn | 17.6bn |
| May-20 | (258.8m) | 17.3bn |
| Jun-20 | (367.01m) | 16.9bn |
| YTD net flows: RMB 747.04m | ||
| 2019 total net inflows: 7.16bn | ||
Source: Safe. *Figure at the end of the month
Since the MRF scheme began in 2015, at least 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.
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.
Southbound funds
Meanwhile, investors in Hong Kong have poured money into southbound funds (mainland-domiciled products sold in Hong Kong) for the fourth consecutive month.
Year-to-date, southbound funds have attracted RMB 65.19m, according to Safe.
Southbound fund flows
| Monthly net flows in RMB | Total net inflows in RMB* since the scheme started | |
| Jan-20 | 63.69m | 328.86m |
| Feb-20 | (21.18m) | 307.68m |
| Mar-20 | 16.51m | 324.19m |
| Apr-20 | 2.88m | 327.07m |
| May-20 | 530,000 | 327.60m |
| Jun-20 | 2.76m | 330.4m |
| YTD net flows: 65.19m | ||
| 2019 total net outflows: 168.43m | ||
Source: Safe. *Figure at the end of the month
In total, Hong Kong’s Securities and Futures Commission has approved around 50 China-domiciled funds to be sold in Hong Kong via the MRF, but only two dozen funds have been made available to investors, SFC records show.
Southbound funds have not gained much traction compared with northbound products, however. Since the MRF scheme began, southbound products have only attracted RMB 330.4m from investors, versus the RMB 16.9bn in net inflows toward northbound funds.
