Posted inProduct News

UBS AM launches three HK-domiciled funds

The Swiss-based asset manager is focusing on the potential of the wealth management connect scheme.
An aerial view of Hong Kong-Zhuhai-Macao Bridge in Zhuhai, Guangdong Province of China. The Hong Kong–Zhuhai–Macau Bridge is a bridge–tunnel system, which consists of a series of three cable-stayed bridges and one undersea tunnel, as well as two artificial islands. The bridge was opened on 23 October 2018.

The three products within the UBS (HK) fund series are the Asia Allocation Opportunity, Asia Income Bond, and Global Income Bond funds.

The funds, which the Securities and Futures Commission authorised for sale to Hong Kong retail investors last month, are primed to be offered to investors throughout the Guangdong-Hong Kong-Macau Greater Bay Area (GBA) when the wealth management connect scheme is eventually launched.

“We plan to extend our domestic product shelf to satisfy the growing demand from investors in the Greater Bay Area for diversification opportunities across asset classes and geographies,” said Markus Egloff, head of wholesale client coverage, Apac, at UBS Asset Management (UBS AM), in a statement.

The wealth management connect scheme, which was announced in June 2020, will allow people in the GBA to carry out cross-boundary investment in wealth management products distributed by banks present in the GBA. It has southbound and northbound components, depending on the residency of the investors.

Residents of mainland in the GBA will be able to invest in eligible investment products distributed by banks in Hong Kong and Macao; and residents of Hong Kong and Macau will be allowed to invest in eligible wealth management products distributed by mainland banks in the GBA.

The Chinese, Hong Kong and Macau financial regulators signed a memorandum of understanding to set up supervisory, enforcement and liaison arrangements for the scheme last month.

The GBA is home to about 70 million people, includes nine mainland cities as well as Hong Kong and Macau, and has a total GDP of approximately $1.7trn, according to estimates by Bain & Company.

In a recent survey of retail investors in the GBA, the US-based consultants found that 70% of respondents in the mainland were interested in buying cross-border wealth management products within the next three years.

“During the initial stage of the wealth management connect scheme, prospective investors are expected to focus on products with relatively low risk. The approved funds include fixed income and multi-asset themes, which aim to satisfy investor demand for diverse allocations in a search-for-income environment,” said Chris Yiu, head of wholesale client coverage, Hong Kong, at UBS-AM in the statement.

Details about the funds are sparse.

The UBS Asia Allocation Opportunity Fund uses “top-down and bottom-up analysis” to invest across the region’s asset classes, and the UBS Asia Income Bond Fund aims to generate income and capital growth from Asia fixed income securities.

The UBS Global Income Bond Fund casts its net wider, aiming “to maximize income and total return by investing in global fixed income markets against a rigorous risk management framework,” said Hayden Briscoe, the firm’s head of fixed income, Asia Pacific.

“UBS AM offers investment capabilities and investment styles across traditional and alternative asset classes and has fully integrated ESG factors into the investment processes across all asset classes,” added Egloff.

Part of Mark Allen.