Mon, Nov 19, 2007 - Page 12 News List

Fidelity to cancel market fund sales starting in January


After securing approval from the Securities & Futures Commission, the local branch of Fidelity Investments (富達投資) -- one of the US' largest mutual fund managers, has decided to discontinue sales of its red-hot emerging market fund.

Beginning in January, Fidelity will stop selling its emerging market fund in Taiwan, as the offshore fund nears the government-imposed cap on Chinese equities investments.

Since 2004, Taiwan has restricted offshore mutual funds, which raise money in Taiwan for investments in overseas stock markets, on putting more than 0.4 percent of their net assets in Chinese shares, including both A shares and B shares.

The cap for investments in red chips and H shares on the Hong Kong stock market, imposed in early 2005, is set at 10 percent of net assets.

The size of Fidelity's emerging market fund -- one of the top-selling mutual funds in Taiwan -- reached US$2.159 billion in September with a return rate of more than 40 percent, local media reports said.

Fidelity's emerging market fund, which joined two other mutual funds -- Merrill Lynch's world mining fund and the Franklin Templeton Latin American Fund -- was named one the most popular funds last month by local investment Web site Fundwatch (普羅財經).

Fidelity may see a buying spree before January.

After January, existing fund buyers will be allowed to maintain their monthly investments with no option to increase their investment amount.

According to local media reports, the government's investment ceiling has forced several offshore funds to exit the local market.

Before Fidelity's emerging market fund, 23 overseas funds have stopped their local sales since Barings Asset Management Holding Ltd (霸菱證券投資顧問公司) discontinued sales of its Hong Kong, Chan fund in 2003.

Fidelity Investments will also discontinue sales of its global growth funds and fixed income funds on Dec. 1 on the grounds that the trading value of both funds' investment in financial derivative products is approaching the government-imposed ceiling.

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