Prescient China Balanced Fund reaches quota capacity
Prescient China Balanced Fund and domestic China Balanced Feeder Fund reach quota due to high demand and the Funds close temporarily to new investors.
Prescient Investments has announced that it has had to temporarily close its China Balanced Fund and domestic China Balanced Feeder Fund until an additional quota has been awarded. The Fund, which launched on 26 March 2013, has reached its current quota due to high demand.
The launch of the Prescient offshore China Balanced Fund was the culmination of a lengthy process in which Prescient applied for, and was the first African institution to be awarded, a Qualified Foreign Institutional Investor licence (QFII), which is the only manner in which you can invest directly in mainland Chinese equities, bond and other securities.
The Chinese market currently offers great opportunity based on the following:
• It is currently cheaply priced versus other markets
• It is a very good diversifier in a South African portfolio
• Economic policy favours growth
• It gives access to different and new industries not available elsewhere
• It offers exposure to an emerging market currency that is linked to a “hard” currency (while it is linked to the US dollar)
• As the market opens to foreign investment, the flow of funds should benefit market returns
Since the launch of the Fund, inflows from both retail and institutional clients have been very strong and it has now reached its quota limit. Although Prescient can accommodate small inflows above the Fund’s quota (by investing in dual-listed stock in Hong Kong that are cheaper) there is a need to limit inflows in order to avoid diluting existing client investments in the Funds. Prescient is therefore closing both the Dublin based UCITS China Balanced Fund and the South African China Balanced Feeder Fund to new investments until such time as it has received an additional quota amount or the movement in the Fund allows for further flows.
Chinese regulation requires a waiting period of six month before an additional quota can be awarded (September 2013). Prescient will continue to monitor and engage with the Chinese authorities and re-open the Fund as soon as it has secured an additional quota amount.
Investors who are interested in investing in the Funds are encouraged to notify Prescient as soon as possible so that their details can be added to a waiting list. These investors will then be first in line if there is capacity or when an additional quota is awarded.
