China's First Hedge Fund Ready For Launch
Friday, September 03, 2010
E Fund Management (E Fund) is set to launch China's first hedge fund following
a change in securities regulations earlier this year allowing investment managers
to trade stock index futures on behalf of clients.
E Fund is currently in the process of seeking regulatory approval from the
China Securities Regulatory Commission (CSRC) to offer its hedge fund to high-net-worth
individuals through separately managed accounts. The fund has said that its
new fund would seek to "hedge market risk through stock index futures and
other tools" and will charge the familiar '2-20' fee structure used by
most hedge founds elsewhere in the world.
China has one of the fastest growing populations of HNWIs; the number of dollar
millionaires reached 477,400 in 2009, 31% more than there were in 2008, according
to the 14th annual World Wealth Report, released on June 22 by Merrill Lynch
Global Wealth Management and Capgemini.
In July, the Chinese authorities announced that rules would be relaxed to allow separately managed accounts to trade stock
index futures, permitting fund managers to hedge against declines in the CSI
300 stock market index, which replicates the performance of the top 300 companies
listed on the Shanghai and Shenzhen stock exchanges. It is understood, however,
that the CSRC will only loosely regulate hedge funds targeted at wealthy individuals.
Founded in April 2001, E Fund is owned by five Guangdong-based
shareholders, including Guangdong Finance Trust Company and GF Securities Co.,
Ltd. As at the end of March 2010, E Fund had in excess of RMB200bn (USD30bn)
under management, making it one of the largest asset managers in China.
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