AMP Capital Investors (AMPCI) is approaching advisers and the direct retail market with a second Chinese equities fund, just a year after raising $55 million for the first one.
AMP Capital China Fund 2 will only be exposed to the Hong Kong-listed Xinhua China 25 Index, excluding the mainland-listed ‘B’ shares included in the first fund.
The index includes 25 of China’s biggest companies across a variety of sectors.
The exposure will for the first six years be under a ‘deferred purchase agreement’ with National Australia Bank, which guarantees that investors will receive at least their initial investment back at the expiry of the agreement. But the fund’s performance will also be limited to no more than around 7 per cent per month multiplied by 1.5 times, depending on the contract secured on the fund’s start date of June 23, 2005.
After the first six years, the fund reverts to an actively managed portfolio of Chinese equities and the capital guarantee falls away.
AMPCI head of private clients Giles Craig likened China Fund 2 to a “supercharged Volvo”, because it exposed investors to China’s exciting growth prospects, yet put a “safety net” underneath it in the form of a the capital guarantee.
“It would be a big call in terms of our brand to put a straight Chinese equities fund to the retail market at the moment,” Craig said.
“For the risk, the market is just not yet there to support it.”
