Guotai Asset plans new overseas commodity fund

14:12, December 20, 2010      Email | Print | Subscribe | Comments | Forum
China's Guotai Asset Management Co, partly owned by Italian insurer Assicurazioni Generali SpA, plans to launch the country's first mutual fund that invests in overseas commodity exchange-traded funds (ETFs), two people familiar with the plan said.

The move is part of a rush by Chinesefund managers to roll out inflation-hedging products to woo investors seeking safe haven investments in commodities such as copper and oil or precious metals such as gold and silver.

Guotai will launch the fund under China's Qualified Domestic Institutional Investor (QDII) scheme, which invests Chinese money abroad.

It will seek regulatory approval soon, said the sources, who declined to be identified because the information is not yet public.

"Commodities and gold funds are attractive these days because they can help investors fight accelerating inflation," said Zhang Haochuan, analyst at fund consultancy Z-Ben Advisors. "They also give institutional investors access to new types of asset class."

China's inflation jumped 5.1 percent from a year earlier in November, reaching a 28-month high. A central bank poll published this week showed that most Chinese expected that inflation would accelerate and raw material prices would increase.

Underscoring strong demand for inflation hedging tools, Lion Fund Management Co, which is launching China's first gold fund under QDII, attracted 800 million yuan ($121 million) on the first day of its fundraising, compared with an average of 650 million yuan ($98 million) for other QDII products launched in the second half of this year.

Guotai's planned QDII fund would invest in overseas ETFs that invest in commodities such as agricultural goods and precious metals.

This would be Guotai's second QDII product. In March, the Shanghai-based fund house launched Guotai Nasdaq 100 Index Fund, China's first index-tracking overseas fund, enabling Chinese investors to buy Nasdaq-listed companies such as Apple Inc and Microsoft Corp.

Source: Global Times