The manager will use constant proportion portfolio insurance techniques to provide the guarantee and generate potential additional returns of up to 6.1% per annum net of management fees of 1.4% per year. The fund will initially invest about 80% of its assets in high-grade bonds, including government bonds, AAA-rated corporate bonds and financial institutions’ bonds. Up to 20% of the remaining assets will be in equities, with possibly a very small proportion held in cash, said Shen Bing, general manager of Tiantong Asset Management.
The fund, whose offer period runs from August 17 to September 15, will be targeted at retail investors with a minimum subscription of RMB1,000 and additional subscription in lots of RMB500.
The first two funds were launched by China Southern Fund Management in June 2003 and Yinhua Fund Management in February this year. Both raised between RMB5 billion and RMB6 billion in subscriptions.