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Investors with at least 5,000 yuan (US$600) will be able to take part in China's first bond mutual fund starting Monday.
China Asset Management Co Ltd said yesterday that from then through October 18, public investors would be able to subscribe to a minimum of 5,000 units in the open-end ChinaAMC Bond Fund at 1 yuan apiece. Bigger purchases can be made in 1,000-unit blocs, the Beijing-based company said.
Subscriptions will be available at branches of China Securities Co Ltd, Bank of Communications and China Construction Bank. The fund will charge a 1 percent subscription fee and a 1.2 percent redemption fee.
Liu Xiaohong, an analyst for Industrial Securities Co Ltd, predicted the fund will attract investors repelled by the uncertainties of China's stock markets.
When these are turbulent, buying bonds is seen as a safer use of capital and bond mutual funds as yielding more stable returns than stock funds.
In the United States, the annual yield from the bond market varied from minus 4 percent to 31 percent between 1973 and 1997, while the swing for Standard & Poor's 500 was almost twice as wide - from minus 26 percent to 38 percent - according to China Asset Management.
A fund manager for the company, who declined to give his name, said the mainland has lacked bond funds until now because qualified managers could not be found. ChinaAMC's has seven years' experience in bond investment, he said.
The manager held out the prospect of a 5 percent per annum return on investment.
The new fund is committed to using its assets exclusively to buy corporate bonds and - with at least 20 percent of its capital - treasury bonds issued by the central government.
(Shanghai Daily September 11, 2002)
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