Citibank Brings Class B Mutual Funds To Hong Kong Investors

by Mary Swire, Tax-news.com, Hong Kong

23 April 2001

Widening the range of investment vehicles available to Hong Kong investors, US financial services group Citibank is launching class B mutual funds in the SAR. Unlike class A funds, which are widely sold in Asia, these class B mutual funds charge an exit fee rather than a front-end fee.

From today, Citbank will offer 50 mutual funds from fund companies INVESCO Asset Management Asia Ltd, Janus International (Asia) Ltd and New-Alliance Asset Management (Asia). They will have an exit charge which will gradually decrease from four percent in the first year of investment to nil after four years.

Class B mutual funds have been available in the US for some time, but have been unfamiliar territory to Asian investors up to now. Citibank hopes to enlighten them, having recently introduced the funds in Singapore. The bank also plans to offer them in Taiwan and launch class B offshore funds for investors in the Asia Pacific region.

Betty Ng, director of investment sales and marketing at Citibank in Hong Kong, said that Asian investors were more willing to embrace class B mutual funds now as they are more interested in investing for the long term. She added: 'People do not want to pay five per cent when they have not made any money yet. With class B funds 100 percent of a person's money is invested immediately.'

The annual management fee for class B funds, however, is higher than for class A funds at 2 percent (one per cent for the latter) and Citibank will make a one per cent charge for investors switching between the two products.

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