Lion Fund Management has launched its inaugural mutual fund allowing investors in China to gain exposure to gold-backed ETFs from overseas.
The fund was launched earlier this month after receiving a license under the Qualified Domestic Institutional Investor scheme (QDII), which provides domestic investors access to foreign financial markets.
"The product will widen investors' asset allocation choices, and provide them with a new way to defy inflation and keep their value during times of uncertainty," Song Qing, director of international business based in Shanghai, told the Asia Asset Management news site.
He added: "Ideally we want to have a product investing in ETFs in the domestic market, but domestic conditions are not yet mature enough."
The gold fund aims to meet investor demand for physically backed assets to hedge their positions. Physically backed gold ETFs have been very popular this year, with the world's largest gold-backed ETF, the SPDR Gold Trust, rising 26%.
Such is the demand for access to physical gold in developed markets that E Fund Management in China has also applied to China Securities Regulatory Commission for approval to launch a gold fund based on the QDII scheme.
Sinochem Group will back LFM's mutual fund, which will be worth up to US$500 million (€377 million). The fund charges a 1% management fee and made 800 million remnimbi (€90 million) on its first day of trading.
This article first appeared on www.risk.net
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