Chinese manager E Fund seeks larger RQFII quota
20 Jul 2012
E Fund Management said it is seeking to enlarge its RQFII quota and has been rejecting new subscribers for its E Fund RMB Fixed Income Fund.
China's second largest asset manager was awarded an RQFII quota limit of RMB1.1bn ($172m) this year. Nathan Lin, Managing Director at E Fund Management (HK) Co. said: "We already used up our quotas and we can't take in more money."
"In China, for an authorised fund, the size tend to shrink until the fund raising is completed, the outgoing investors tend to outnumber the ingoing investors. In Hong Kong, it's different, we have observed very steady growth of investors."
Under RQFII, fund managers can invest at least 80% of their quota on fixed income products and the rest in equities.E Fund's RMB Fixed Income Fund is 89% invested in fixed rate debt instruments and the rest in equities and cash.
China earlier this year granted RQFII quotas totaling RMB20bn to 21 fund companies and only a few have met their targets. In April, the government announced an RMB50bn increase in the quotas, meant for use in equities through ETF products.
E Fund Management has submitted application to launch an RQFII-ETF product. Lin declined to comment on the status of its application. "We're supposed to be silent on these types of issue."
Author: IPA staff