Malaysia's RHB Investment Management will link its first structured fund of 2009 to Chinese equities.
RHB China Averaging Capital Protected Fund is a three-year structured fund, which invests up to 10% capital in OTC options linked to the Stabiliser China Index, an index comprising Chinese H-shares listed in Hong Kong where they are included in the Hang Seng Mainland Composite Index. Principal protection is provided by investing 85% of the fund in discounted zero coupon negotiable instruments of deposits, with the remaining 5% going towards cash instruments.
"The [Chinese] economy showed strength in withstanding the global financial crisis as it had a healthy surplus and high foreign reserves," said Sharifatul Hanizah, RHB IM's MD, at the launch of the fund earlier this week. "[China] is also projected to grow at a moderate pace of 6-8%, a considerable growth rate during such a recessionary time."
The firm says that the fund uses the principle of dollar cost averaging, by which it invests fixed amounts at regular intervals over the term to effectively reduce the volatility of index returns associated with a one-off purchase.
The fund is being distributed via RHB Bank and third parties, including UOB Bank, and has an approved size of MYR150m (US$40m).
RHB Investment expects to launch another three funds this year on top of its current 25 retail funds.
This product appears in Recent Additions (Malaysia).