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Swiss-HK MRF a challenge, says BEA Union

The CEO of the Hong Kong-based firm shares her thoughts on Switzerland fund distribution, her firm's China strategy and the burden of a Ucits structure.
After 2.5 years, BEA Union fund gets MRF nod
Eleanor Wan, Bea Union Investment

The Swiss-Hong Kong mutual recognition of funds (MRF) scheme connects the fund markets of Switzerland and Hong Kong. Launched in December 2016, industry players were optimistic about the scheme, citing an appetite for locally-run Asia-focused strategies from Swiss investors.

It has been a year since Bea Union, the joint venture between Hong Kong-based Bank of East Asia and Germany’s Union Investment, registered its Asia-focused fixed income and multi-asset funds, with the aim of targeting private banks, family offices and wealth managers.

But the firm has not yet found a distribution partner, Eleanor Wan, the firm’s Hong Kong-based CEO, told FSA.

Private banks in Switzerland are crowded with products, she said. “We are still in discussion with some of these private banks.”

Market sentiment has also contributed to the difficulties of promoting Asia-focused products in Switzerland.

“The current market sentiment over investing in Asia is a bit difficult. I think a lot of our clients are still on the sidelines and are waiting for [a good opportunity to invest in the region].”

The time difference between Hong Kong and Switzerland adds to the difficulty in forging relationships with potential distribution partners, according to Wan.

So far, only four funds – two managed by Bea Union and two from Harvest Global – have been registered for sale in Switzerland under the scheme, according to records from the Swiss Financial Market Supervisory Authority.

FSA contacted Harvest Global for comment, but the firm was not able to respond in time for publication.

Partnership route

Given the difficulties in Switzerland, Bea Union is seeking a strategic partner in Switzerland who would help market its products to distributors, Wan said.

Wan did not comment about the marketing capabilities of its German shareholder, Union Investment, but noted that Bea Union sub-advises some of its Ucits funds.

Despite of distribution challenges, Wan said the Swiss-HK MRF scheme has helped the firm gain recognition from family offices, with some of them investing into Bea’s funds.

To a certain extent, Wan believes that the MRF scheme helped attract clients.

“One of the criteria that clients ask about is whether the funds are registered in Switzerland,” she said.

Part of the Bonhill Group.