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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

The Ucits burden

As a Hong Kong-based manager, all the funds that Bea Union manages are domiciled in Hong Kong in the form of unit trusts, according to Wan.

Although having a Ucits fund platform is the common route for Asia-based managers that are planning to expand in Europe, the firm is still contemplating if it is feasible to launch Ucits funds, Wan said, adding that the topic has become an ongoing “big debate” internally.

Managing Ucits funds could be a “big burden internally”, Wan said.

“Ucits funds would definitely be an easy platform to work with [when promoting your products to European investors]. But it is quite a big exercise if we were to launch one,” she said.

Wan explained that having an on-the-ground presence in Europe is necessary for a successful Ucits platform.

Doing the administration and compliance work from Asia would be difficult, Wan added. “A lot of the time, we do not understand the implication of a change in regulation, so it would be a really tough exercise if we were to manage and administer a Ucits fund from Hong Kong.

“Normally, firms with a Ucits platform would have an office in Luxembourg and Dublin to do the administration work and ensure they are compliant.”

Although Wan does not rule out the possibility of having people on the ground in Europe, she said that it is not in the firm’s plans.

Echoing Wan, Value Partners’ Hendrik Von Ripperda-Cosyn, London-based country head and senior director for EMEA sales, previously said that simply replicating funds into Ucits format is “too simplistic as a model”, which is why the firm decided to establish a London office in 2016.

Wan said that Bea Union is instead planning to move to Hong Kong’s open-ended fund company (OFC) structure.

The OFC regime, which was implemented at the end of July, is a variable capital structure for fund management firms, as opposed to current structures, which have a fixed capital structure.

AMAC registration

Wan also shared the firm’s plans for its China strategy, particularly for its Shenzhen-based investment management wholly foreign owned enterprise (IM WFOE).

About one year after receiving approval to establish an IM WFOE in China, Bea Union is now in the “late-stages” of setting up its onshore office, Wan said

The Shenzhen-based WFOE now has 10 people, including two investment professionals: one specialising in China equities and the other in fixed income, according to Wan. The firm has also been in talks with potential distributors.

She expects the office to register with the Asset Management Association of China (Amac) and apply for a private fund management licence (PFM) licence by the end of the year.

Management has not yet decided on the strategy it would launch onshore if it receives a licence from the association, according to Wan.

Within its China strategy, the firm also has two funds distributed onshore through the Hong Kong-China MRF scheme.

Part of the Mark Allen Group.