Chinese Fund Firms Diversify Products
BEIJING, Apr 04, 2008 (SinoCast China Financial Watch via COMTEX) --
Chinese fund firms are making products innovations in aspects of investment targets and investment strategies, in an attempt to avoid homogeneity.
Recently, about 30 new funds have gained regulatory approval for issuance from the nation's securities watchdog China Securities Regulatory Commission. Some innovations have been found in them.
For instance, Fullgoal Tiancheng Dividend Fund, a fund product under Shanghai-based fund management company Fullgoal Fund Management Co., Ltd., will make a dividend plan at the start of each year. How much dividend and when the dividend will be allocated are to be written in the contract. As long as the requirements for the dividend are met, the dividend for the year is supposed to be in line with the plan, no matter how volatile the stock market is. The fund enables investors to cash in the return on investment in time.
Two innovation models can be adopted currently, said Mr. Xie Wei, deputy general manager at Fullgoal Fund Management. On the one hand, fund companies can introduce the mature product models from foreign countries and learn from them. On the other hand, fund companies can innovate their products in accordance with the demands from the local investors. Fullgoal Tiancheng Dividend Fund followed the second model. In addition, some people even called on a reform in fund policies.
Besides the to-be-issued funds, innovations can be seen in the already-issued bond funds. Some bond funds attract long-term investors and institutional investors via handling charges; some invested partial capital into the stock market; and some ordered that the short-term investors to pay for the redemption, in a bid to reduce the short-term arbitrage.
If the funds' investment portfolios are similar, they cannot resist the market's fluctuation, said Xu Xiaonian, professor of economics and finance at China Europe International Business School. And there is a large space for the growth of the Chinese funds.
The innovation of the fund products is expected to accelerate the developments of investor education and fund- related industries. Different funds can meet different investors' demands. The blind investments will be reduced and fund investors will become more and more rational.
And the funds innovation will bring changes to the related industries like proxy banks, investment rating, fund custody, as well as fund promotion, according to market analysts. The move is likely to change the whole industry chain.
