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November 14, 2009

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QFII funds average yield rises

The average return of funds managed by overseas institutions to trade in yuan shares grew 8.12 percent in October, led by the robust growth of the domestic stock market, an industry report said yesterday.

The performance outshone that of domestic equity funds, which rose 7.38 percent in average returns, according to research firm Lipper & Co.

In the first 10 months of this year, the average return of funds under the Qualified Foreign Institutional Investor program surged 68.1 percent, higher than a 58.18 percent gain for domestic equity funds.

"China's economy will achieve an 8 percent expansion this year after a robust growth in October, boosting investor confidence in the market and providing more opportunities for mutual funds in the fourth quarter," said Xav Feng, research head of Lipper China.

The Shanghai Composite Index gained 7.79 percent last month, faster than any other market in Asia Pacific.

The return of funds operating under the Qualified Domestic Institutional Investor program, which allows Chinese institutions to invest in foreign shares, grew 3.37 percent last month. The funds returned 49.65 percent on average in the first 10 months of this year.

China resumed approval of QDII funds last month after a 17 month suspension. E Fund Management Co Ltd got a quota of US$1 billion and China Merchants Fund US$500 million.

"The size of the two funds is smaller than the first batch of QDII funds, each of which got a quota of US$4 billion, but the resumption showed the regulator has regained confidence in the overseas markets and is likely to raise quotas in the future," Feng said.


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