Pension fund investment kicks off
Markets eagerly anticipate inflows of fresh money
China’s pension funds have entered the markets.
The first batch of funds has been wired to designated accounts and the fund- ready portfolios have started investing, according to a report on Sunday on news portal eeo. com. cn, which cited an anonymous insider at one of the fund management institutions that is among the first batch of entrusted organizations to invest on behalf of pension funds.
The source said the portfolio at his company fell into the cash management category and while its scale is not large, it has been operating at a fast pace.
The report also said that the second round of selection for pension funds investment portfolios has already started.
Since the first round of selection started in January, pension funds promptly wired money into the accounts of successful bidders within one or two weeks, in a manner that the eeo. com. cn report described efficient and speedy.
Another unnamed insider told eeo. com. cn that his company has more than two portfolios that have successfully won bids to invest a portion of the pension funds, including one portfolio for equity investment.
Each major public fund company has won at least one bid, but it is difficult to estimate the total sum of the capital involved, the source said.
As of now, funds have been allocated to cash, fixed- income or equity investment portfolios, the report said. Most of the portfolios have started investing. Cash management and monetary funds have been the fastest to start due to their high liquidity.
During the tender and bidding process, the authority has set the highest requirements for pension funds that will be invested in equities. To win a bid, fund managers must have the best rating on an evaluation of their fundamentals, track record, fund manager capabilities and risks.
Only four equity investment products totaling 10 billion yuan ($ 1.46 billion) were among the first batch of selected portfolios, the report said.
The State Council, China’s cabinet, finalized guidelines in August 2015 that allowed pension funds to be invested in higher- return products, including stocks. Previously, pension funds could only invest in low- yielding bank deposits and treasuries.
As of the end of 2015, about 2 trillion yuan in pension funds might be collected for investment, according to media reports. That means that theoretically, about 600 billion yuan from pension funds could be put into the stock market.