Allianz re-opens RMB fund

Allianz Global Investors has re-opened its Allianz RCM Renminbi Fixed Income fund after one year of being soft-closed to new investors.

The fund managed by Helen Lam was soft-closed in August 2011 after its assets hit €450 million only two months after its initial launch back in June 2011. Its assets under management have since fallen to €358 million to date.

The Luxembourg-domiciled fund aims to hold a majority of its investments in renminbi-denominated assets and it targets a return, inclusive of currency appreciation, of around 5% per annum.

Lam said she aims to enhance the portfolio’s total return through duration positioning to capture the policy-driven interest rate movements in mainland China.

'Though the recent fundamental and cyclical factors in China seem to suggest a softening RMB appreciation outlook,' said Lam, 'we believe that the pace of RMB appreciation will remain stable going forward.'

'This should be supported by China’s strong commitment to the RMB Internationalisation process through the promotion of cross-border trade and investment flows.'

'Recent data suggests that approximately one-tenth of China’s total trade is settled in RMB, up from only 2% two years ago.'

Lam, who also runs the  added that the Allianz investment team believes that cross-border RMB trade settlement should continue to the key driver of the offshore RMB (CNH) liquidity growth in Hong Kong.

This will lead to a more stable CNH currency movement that is increasingly driven by real business demands rather than pure currency speculation.