HSBC Holdings Plc's Chinese fund management joint venture plans to launch a third fund next month and is looking to raise more than 3 billion yuan ($387.4 million), the venture's head said on March 01.
The new fund, which must still be approved by regulators, will hold between 20 and 80 percent equities at any given point depending on the market outlook, said Steve Lee, chief executive of HSBC Jintrust Fund Management.
"Our third fund is actually a fund which will target the middle of the risk scale," he told Reuters.
"In structure it's a balanced fund. It's called the HSBC Dynamic Strategy fund. With the target size we're quite optimistic at the moment. We definitely will try to beat our previous fund launches."
Lee also said the firm had not seen a surge in redemptions after the Shanghai stock market plunged almost 9 percent on February 27 in its biggest drop in a decade.
"We have seen no major redemptions happening, our own and the people that we called. We called around," he said. The sell-off has failed to cool China's red-hot fund industry. Beijing approved the launch of four new funds this week, with one raising 10 billion yuan within just one hour on February 27, even as the stock market started to tumble.
HSBC Jintrust is 49 percent owned by Europe's biggest bank, with the remainder held by government-backed Shanxi Trust and Investment Corp. It launched its first two funds last year and had about 4.8 billion yuan ($619.9 million) in assets under management at the end of 2006.
The joint venture raised almost 3 billion yuan in May with the launch of its HSBC Jintrust 2016 Lifecycle Fund, which began with a large weighting of equities but gradually reallocates to fixed-income as it approaches maturity.
It raised another 1.44 billion yuan in September with the launch of its second product, the HSBC Jintrust Dragon Growth Equity Fund. Both Chinese and international investors have shown huge appetite for the country's domestic A-share funds as the benchmark Shanghai Composite index climbed more than 130 percent last year.
But the sell-off of high-flying mainland shares early this week helped trigger a global market slide, with equity and higher risk debt markets stumbling.
The new HSBC fund will allow the managers to hedge against stock market risk by cutting its equity allocation.
The chief executive said the joint venture had also been selected as the research adviser for the $200 million in Qualified Foreign Institutional Investor quota that was granted to HSBC's Hong Kong fund arm. The scheme lets select foreign institutions invest in China's equity and debt markets.
HSBC Jintrust has also indicated to Chinese regulators that it would be interested in launching an equity-based product under the country's Qualified Domestic Institutional Investor (QDII) scheme, which lets local Chinese investors put money abroad.