Mainland-Hong Kong Mutual Recognition of Funds (MRF)

30/12/2024

Important Information:

Schroder Asian Asset Income Fund^ invests primarily in Asian (including countries in Asia-Pacific) equities and fixed income securities.

The fund invests in equity securities would subject to equity investment risk.
The fund’s investment in fixed income securities may be subject to credit and counterparty, credit rating risk, etc. The fund investment in below investment grade and/or unrated debt securities may be subject to higher degree of the above risks.
The fund’s investment in emerging and less developed markets may be subject to significant risks such as ownership and custody risks, political and economic risks, market and settlement risks, etc.
The fund may invest into investments denominated in currencies other than the fund's base currency and subject to currency and exchange risk. If the investor’s based currency is a different currency than the share class’s currency being invested in, the investor needs to carry out conversion and would involve conversion costs. The net asset value of the fund may be adversely affected by changes in foreign exchange rates and exchange rate control.
The fund may be subject to risks similar to those associated with the direct ownership of real property through its investment in REITs. REITs are dependent upon management skills and generally may not be diversified. The REITs invested in by the fund may not be necessarily be authorized by the SFC and the distribution policy of the fund may not reflect the dividend policy of the underlying REITs.
The fund may invest in derivatives for hedging purposes. In adverse situations, the fund’s use of derivatives may become ineffective in hedging and the fund may suffer significant losses. Risks associated with derivatives include counterparty risk, credit risk and liquidity risk. Such exposure may lead to a high risk of capital loss.
For distribution share classes/units, the distribution rate is not guaranteed. Distribution yield is not indicative of the return of the fund. Distributions maybe paid out of the capital of the fund at the Manager’s discretion. This amounts to a return or withdrawal of part of the amount you originally invested or capital gains attributable to that and may result in an immediate decrease in the net asset value per share or decrease in the value of units of the relevant Distribution Units.
Under the mutual recognition of funds scheme between Mainland China and Hong Kong, there are risks such as market quota limitations, the fund's inability to consistently meet the qualifying criteria, different market practices, and arrangements for holding fund units through agents. The arrangements concerning tax issues in Mainland China are currently unclear. There may be tax policy differences between the sales of the fund in Mainland China and the general retail funds in Mainland China, as well as differences between the tax policies in Mainland China and Hong Kong, which may lead to differences in the returns of fund units sold in Mainland China compared to those sold in Hong Kong. Please refer to the relevant offering documents for further details.

You should not make any investment decision solely based on this document. Please read the relevant offering document carefully for further fund details including risk factors.

Schroders welcomes the decision to expand the Northbound quota for the Mutual Recognition of Funds (MRF) Scheme to not exceed 80% of the value of the funds’ total assets (the “Northbound quota”) which was announced by the China Securities Regulatory Commission (CSRC) on 20 December 2024. This new measure will broaden access for mainland China investors to a diverse range of investment solutions from global asset managers.

Since launching our first MRF product in 2017, Schroders has remained committed to leveraging our international expertise to offer innovative products and solutions that support mainland Chinese investors in achieving their long-term financial goals. Through the MRF Scheme, investors in mainland China can access our Schroder Asian Asset Income Fund^, which is currently marketed through more than 10 distribution partners in mainland China. Given a current fund size of around US$2.7 billion, the new Northbound quota opens up a potential opportunity for the fund’s growth in scale to US$10 billion through the MRF.

Schroder Asian Asset Income Fund ^, primarily invests in quality companies in Asia with proven track records of generating sustainable cash flows, giving the fund a reliable income stream. The fund derives its income from multiple sources such as dividend yielding Asian equities, bonds and cash, and its flexible approach to investing within and across different asset classes aims to deliver more consistent returns during all phases of the economic cycle.

Jason Yu, Head of Multi-Asset & Fixed Income Management, Asia, Schroders, said:

“We believe Asian equity and bond investors will benefit from the US interest rate cycle which is attracting capital flow back from US dollar assets to Asian capital markets. Against such a backdrop, we continue to maintain our slightly positive stance on equity. Looking ahead, Asia credit will continue to stay well-anchored by healthy fundamentals, strong technicals and high all-in yields. For mainland Chinese investors seeking exposure internationally to build resilience in and enhance return potential of their portfolios while navigating an ever-changing market landscape, we believe our actively managed Schroder Asian Asset Income Fund^ is well positioned to support this objective. “

Gopi Mirchandani, Hong Kong CEO and Head of Strategy, Asia Pacific, Schroders, said:

“We have been committed to the mainland Chinese market for 30 years as one of the first global asset managers to operate locally and we are delighted to welcome the expansion of Northbound quota for the MRF scheme. The development further deepens Hong Kong’s role as a ‘super connector’ for global capital flow between mainland China and international markets. Since launching our first MRF-eligible product in 2017, we have dedicated ourselves to providing mainland Chinese investors with diverse overseas investment opportunities. We will continue to aggregate our holistic investment expertise across different asset classes and markets to develop and provide domestic investors with diverse investment options.”

_{^ Investors should note that dividend will not be distributed for M share class (USD Accumulation), M share class (RMB Accumulation) and M share class (RMB Hedged Accumulation).}

Notes to Editors

Schroders is a global investment manager which provides active asset management, wealth management and investment solutions, with £773.7 billion (US$978.1 billion) assets under management, as at 30 June 2024. As of December 2023, our multi-asset assets under management stood at US$220 billion. For over 75 years, Schroders has been managing multi-asset mandates for some of the world's largest pensions, insurers and banks led by our robust team of on-the-ground multi-asset portfolio managers and analysts globally and in Asia.

Schroders has been in business in Hong Kong for over 50 years and entered the Mainland Chinese market in 1994. Over the years, we have won a number of industry awards and accolades across asset classes including the “Best Group – Overall” and “Best Group – Mixed Assets” at the LSEG Lipper Fund Awards Hong Kong 2024 as well as “Multi-Asset House of the Year” at Fund Selector Asia Awards Hong Kong 2023^#.

_{# The result of LSEG Lipper Fund Awards Hong Kong 2024 is based on performance as of 31 December 2023. The result of Fund Selector Asia Awards Hong Kong 2023 is based on the performance of the Multi-Asset investment team as of 5 Nov 2021 – 4 Nov 2022.}

Important Information
The contents of this document may not be reproduced or distributed in any manner without prior permission.
This document is intended to be for information purposes only and it is not intended as promotional material in any respect nor is it to be construed as any solicitation and offering to buy or sell any investment products. The views and opinions contained herein are those of the author(s), and do not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. The material is not intended to provide, and should not be relied on for investment advice or recommendation. Any security(ies) mentioned above is for illustrative purpose only, not a recommendation to invest or divest. Opinions stated are valid as of the date of this document and are subject to change without notice. Information herein and information from third party are believed to be reliable, but Schroder Investment Management (Hong Kong) Limited does not warrant its completeness or accuracy.
Investment involves risks. Past performance and any forecasts are not necessarily a guide to future or likely performance. You should remember that the value of investments can go down as well as up and is not guaranteed. You may not get back the full amount invested. Derivatives carry a high degree of risk. Exchange rate changes may cause the value of the overseas investments to rise or fall. If investment returns are not denominated in HKD/USD, US/HK dollar-based investors are exposed to exchange rate fluctuations. Please refer to the relevant offering document including the risk factors for further details.
This material has not been reviewed by the SFC. Issued by Schroder Investment Management (Hong Kong) Limited.

Other Schroders sites

Schroders Capital

Cazenove Capital

What we do

Insights

RFP Enquiries

About us

Mainland-Hong Kong Mutual Recognition of Funds (MRF)

Follow us