| Fund to safeguard principal |
| Last Updated(Beijing Time):2006-11-29 09:40 |
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A Shanghai fund partly owned by Belgium's KBC Group will become China's first asset manager to ensure that all its products guarantee the return of investment principal, the head of the fund said yesterday.
The firm, co-funded by KBC Asset Management and China's Goldstate Securities Co, plans to unveil its first product in March, Chairman Peng Zhenming told a news conference.
"We will raise between 2.5 billion yuan (US$319 million) to five billion yuan initially in the hot fund market," Peng said. "Our target clients will be those who prefer low risks but want investment returns higher than bank deposits."
KBC began operational preparations yesterday with Goldstate Securities in Shanghai, joining 20-odd global financial giants such as HSBS Holdings Plc and UBS AG in going after a slice of the potentially lucrative money-management sector.
KBC Asset Management, Belgium's biggest asset manager, holds a 49 percent stake in the 150-million-yuan firm while Goldstate owns the balance.
The joint-stock fund venture will likely post a loss during its initial operation stage due to its investment strategy, which focuses on fixed-income vehicles such as bonds, Peng said.
All the firm's products will guarantee investors' principal after a pre-set period, according to Peng.
China's proposed launch of stock-index futures early next year will give the firm a shot in the arm by bolstering its risk-hedging capabilities, he said.
Peng expects the company to break even in two years. The assets under its management may grow to between 7 billion and 8 billion by the end of 2008, he said.
Chinese authorities, eager to divert some of the country's US$2 trillion in personal savings to other investment tools, are encouraging foreign participation in the fund industry in hopes of luring overseas investment and risk-control expertise.
The fund venture marks KBC's second venture into China's mainland after establishing a representative office in Shanghai in December 2004.
KBC's experience in operating principal-guaranteed funds can "bring a lot of expertise" to the China venture, said Stefan Duchateau, chief executive of KBC Asset Management.
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