Issuance of closed-end funds under study
(Shanghai Daily)Updated: 2007-03-15 15:47
China Southern Fund Management Co is studying a plan to resume the
issuance of new closed-end funds as the industry acts to deal with rapid
investor redemption amid growing stock market volatility.
"We have been actively working on a plan on new closed-end funds," which will have more investment channels than the previous funds, said Gao Liangyu, general manger at China Southern, in a statement yesterday.
China's stock authority will soon vet applications from big money managers to begin sales of closed-end mutual funds, sources told Shanghai Daily in January.
Issues of closed-end funds were virtually halted in 2001 as the market started to embrace open-end funds.
Closed-end funds have a fixed number of units sold to investors and trade on stock exchanges like normal securities. They usually have a life span of 10 to 15 years before liquidation, during which investments can't be redeemed.
Open-end funds, although not publicly traded, let investors redeem their units after initial lock-up periods. They also pool client capital periodically and invest in more types of equities than closed-end ones.
The new closed-end products may "invest in warrants, asset-backed securities, as well as planned stock-index futures and options," Gao said in the statement. They are now only allowed to buy stocks, bonds and money-market tools.
The closed-end funds will likely "even invest in foreign exchange, real estate and gold," Gao said, without giving a timeframe for the launch of the products.
Fluctuations in China's stock markets have made investors redeem funds whenever declines appeared and prompted industry calls for the re-introduction of closed-end products.
(For more biz stories, please visit Industry Updates)
| ||