From: Reuters
Published March 11, 2008 02:08 AM

China plans 1st "socially responsible" mutual fund

SHANGHAI (Reuters) - China's Industrial Fund Management Co Ltd is planning to launch a fund investing in shares of "socially responsible" Chinese listed firms, the first mutual fund product of its kind in the country, state media said on Tuesday. The company, which earlier this month received regulatory approval to launch the fund, has not published a prospectus. But analysts expect it to target companies engaged in environmentally friendly projects.

"What's different is that the fund will concentrate its investment on listed firms with decent performance in terms of social responsibility," the China Securities Journal said.

It also shows Beijing is seeking to encourage product innovation in China's 10-year-old, 3.2 trillion yuan ($450 billion) mutual fund industry, the newspaper added.

Socially responsible investments, which also tend to shun polluting industries and such businesses as casinos, tobacco and alcohol, have been growing in developed countries in recent years.

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ABN AMRO said in March last year it planned to launch certificates based on its new Climate Change and Environment Index on the Singapore and Hong Kong bourses. The index is composed of 30 stocks with exposure to sectors such as water, waste management, hydroelectric power and ethanol.

Some analysts said the new offering from Industrial Fund Management could be a hard sell in China, in part due to a stock market slump that has hit overall mutual fund sales.

"It remains unclear whether the fund would be successful in China because most domestic investors focus on returns but not social responsibility," said Zhou Liang, head of China research for Lipper, a Reuters company, which tracks more than 95,000 funds worldwide.

The fund is expected to invest 65 to 95 percent of its proceeds in stocks and the rest in bonds, state media said.

Officials at Shanghai-based Industrial Fund Management were not immediately available for comment.

($1=7.106 Yuan)

(Reporting by Charlie Zhu; Editing by Edmund Klamann)

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