GF Fund Management Co., an asset-management unit of China’s fourth-largest brokerage, will next month start the country’s first fund that tracks a U.S. property index to meet rising demand from local investors.
The fund will seek to match the performance of MSCI US REIT Index and invest through China’s QDII program, which allows purchases of financial assets from within the country, Chairman Wang Zhiwei told reporters in Shanghai today. Wang declined to comment on how much his company targets to raise.
Real estate investment trusts are not traded in China, where an increasing number of affluent Chinese are buying properties overseas after the government tightened measures on the real estate market to curb surging prices. Restrictions on investing in foreign currencies and offshore capital markets have limited options for local investors.
“The U.S. economy and property market are recovering,” Wang said. “It’s a good time for such investment; it will be good to start with tracking an index rather than actively investing in properties or developers’ shares, since we are still new to the foreign market.”
U.S. housing starts climbed 6.8 percent to a 914,000 annualized rate from a revised 856,000 in April, Commerce Department figures showed yesterday in Washington. Applications for one-family home construction increased to a 622,000 pace, the fastest since May 2008.
GF Fund, a unit of GF Securities Co. and based in China’s southern business hub of Guangzhou, will accept public subscriptions for the fund from July 8, Wang said.
Lion Fund Management Co. started a fund last year with a target to raise $500 million to $1 billion for China’s first fund to invest in global REITs. The company plans to invest in the U.S., Australia, Europe, Singapore and Hong Kong markets, Chief Executive Officer Ao Chengwen said in August.
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