Prudential China venture fund eyes QDII

The Chinese venture fund of Prudential Financial Inc., the No. 2 U.S. life insurer, said last week that global market turmoil won’t derail its plan to roll out overseas investment products in China.

Everbright Pramerica Fund Management Co., the Chinese venture operation of Prudential, has plan for three to five funds under China’s Qualified Domestic Institutional Investor (QDII) scheme, and will soon seek regulatory approval for its first product, CEO Teh-Hsiu Fu said last week at the Reuters China Summit.

He did not give a timetable for when the product will be launched. Everbright Pramerica, which in August obtained a QDII license, will soon submit applications to the China Securities Regulatory Commission to launch its first QDII product, he said.

“The global stock market tumble has hurt the performance of QDII funds,” Fu said. “But if we look ahead, a possible recovery in the global economy next year and a slowdown in yuan appreciation would benefit QDII’s long-term growth.”

Mainland Chinese were allowed in 2006 to invest overseas through the QDII program, but such products have seen waning demand and heavy redemptions in recent months due to the poor performance of overseas capital markets.

A QDII product launched by Fortis’ saw net redemptions of 76% in the third quarter. In September, China’s first overseas QDII fund, launched by Hua An Fund Management Co., halted redemptions following the collapse of its foreign partner, Lehman Brothers Holdings Inc.

Still, QDII could help Chinese investors diversify their risks, Fu said.

Prudential posted a loss in the third quarter due to investment losses, but has said it has sufficient capital and will not need to raise more to maintain key credit ratings. —Samuel Shen, Reuters