China's first and long-anticipated open-ended investment fund will make its public debut next Tuesday.

The Hua'an Innovation Investment Fund, a contractual open-ended fund, will be launched by the Shanghai-based Hua'an Fund Management Co Ltd.

"The Hua'an Innovation Fund will add liquidity to the market and open new investment channels for investors," said Yang Wenbin, Hua'an Fund's marketing director.

An initial 5 billion units, each showing a face value of 1 yuan (12 US cents), will be sold to retail and institutional investors by the Bank of Communications -- the fund custodian -- in its 139 branches in 13 cities.

Redemption will not be permitted until three months after the launch of the fund.

Sixty percent of the units will be open to retail investors between September 11 and 18, with a minimum bid set at 10,000 yuan (US$1,200) and a cap of 300,000 yuan (US$36,100). The cap will rise to 500 million yuan (US$60 million) three months later.

"Our targeted buyers are experienced retail investors who seek a long-term return," Yang said.

Despite the downturn of the stock market in the last three months, experts believe the new fund will be heavily subscribed.

"After experiencing ups and downs, investors, especially individual ones, tend to put their money in funds managed by professional financial analysts," Yang said.

The Hua'an Innovation Fund's investment portfolio comprises at least 80 percent of mainland domestic A shares domestic bonds.

"Any innovative listed enterprise with high growth potential is our favourite. We won't only focus on high-tech companies," said fund manager Shang Zhimin, who has successfully managed two closed-end funds.

He said they would also diversify their investment to scatter the risks involved.

But Deputy General Manager of Hua'an Fund Shao Jiejun warned that risks still exist. "The value of shares goes down as well as up, we can't promise investor returns," he said.

As for institutional investors, they can apply for investment on either September 19 or 20. The threshold is 300,000 yuan (US$36,100) and the cap is 500 million yuan (US$60 million).

(China Daily 09/05/2001)