Investec Asset Management is exploiting flexibility offered by the Renminbi Qualified Foreign Institutional Investor (RQFII) rules to launch China-focused equity and bond funds.
RQFII was introduced in December 2011 and Investec was one of the first firms to receive a licence from the Chinese Securities Regulatory Commission (CSRC).
The licence permits global institutional investors to buy RMB denominated A-shares listed on China’s mainland Shanghai and Shenzen stock exchanges.
The new Luxembourg-domiciled Investec GSF All China Equity fund is a sub-fund within the firm’s Global Strategy Fund umbrella and is co-managed by Citywire + rated Greg Kuhnert (pictured) and Wanyi Yao, with support from the Global 4Factor team.
The new fund uses Investec’s RQFII licence to offer investors a split between A-shares and H-shares from an investment universe of around 1,000 firms.
A critical difference between this fund and the existing one is the ability to provide daily dealing - something which was not possible under the old rules - providing superior liquidity.
'This represents a natural progression for our 4Factor Equity business. China has always been an important part of our universe, and we have demonstrated our ability to leverage our knowledge of the domestic A-share market through our QFII China fund,' Kuhnert said.
'The new RQFII All China Fund is agnostic about where a company is listed, whether it be it through local A or B listings, or offshore H or USA listings – our aim is simply to buy the best ideas at the cheapest price. We are able to take advantage of valuation anomalies that currently exist because the capital account is not fully open yet.'
The CSRC has awarded an Investec an initial $230 million allocation, with $100 million already invested by the All China fund, which launched on 17 May.
Investec plans to use its RQFII licence to launch a second daily dealing Ucits fund later this year within the GSF range, investing in onshore Chinese bonds and to be managed by Wilfred Wee.
The fund launches are part of Investec's desire to get its strategy right in what it sees to be an increasingly important and evolving Chinese market.