China Funds May Have Threshold Halved

China is considering halving the threshold to manage assets for fund companies applying to invest client capital overseas, the China Securities Journal reported on Wednesday.
Fund companies need to manage not less than 10 billion yuan (US$1.46 billion) of client capital by the end of the latest quarter if they apply to invest in overseas markets, versus the 20-billion-yuan requirement now, the newspaper quoted a well-informed source as saying.
The move may attract more fund managers and brokers to join China's Qualified Domestic Institutional Investor, or QDII, scheme, the newspaper said.
Fund firms with at least 200 million yuan in net assets and 20 billion yuan of client capital under management can apply to join the QDII scheme under present rules. They are also required to have been managing securities investment funds for at least two years.
A total of 27 fund firms managed less than 20 billion yuan of client capital by the end of the second quarter of this year, according to financial data provider Wind Info.
"The lower threshold will allow more fund companies, which don't manage a lot of capital but are supported by strong shareholders, to participate in the QDII program," said Su Changjing, an analyst with Guodu Securities Co. "The scheme diversifies investors' risks and boosts their options in the global market, which still can attract domestic investors."
Nine funds under the QDII declined 1.34 percent in net assets last month, according to a report by Lipper & Co.