Fidelity and BlackRock target Chinese investors for offshore funds, driven by interest rate gaps.

From Yahoo Finance: 2025-06-18 19:00:00

Fidelity International plans to offer products for mainland investors seeking higher returns from overseas funds. The Mutual Recognition of Funds scheme could bring partnerships with Chinese mutual fund companies. Chinese investors poured $13 billion into Hong Kong funds in one month, driven by deflationary risks and low domestic rates.

Interest rate gaps between China and the US are key drivers for demand in these products. BEA Union Investment saw assets surge in the program, with mainland investors driving growth. Regulatory scrutiny may arise due to an imbalance in allocations to financial institutions rather than retail buyers. Yuan devaluation pressure could impact product approvals.

Mainland investors scaled back in April, selling $22 billion yuan worth of assets from Hong Kong funds. Tariff-driven concerns influenced the shift. Amundi saw increased net inflows from exiting funds and submitted two more funds for the scheme. JPMorgan Asset Management faced bottlenecks with finding enough buyers from Hong Kong to contribute to funds.

Fidelity International may repurpose existing funds for the program, starting with fixed-income strategies. The revised program allows for global firms to appoint fund managers living outside of Hong Kong. Mainland investors have access to three other offshore investment programs. China plans to lift cap flows for the Qualified Domestic Institutional Investor program.

Read more: Fidelity, BlackRock Target Chinese Demand for Offshore Funds