China is investigating mutual funds to ensure their holdings match contractual terms, the China Securities Journal reported.
In order to achieve quick gains, some funds have invested in sectors that are entirely irrelevant to their names or contractual terms, and have thus become “blind box” funds, the paper said, citing industry sources.
A fund with an innovation and technology focus had invested in banks, brokerages, and insurers instead, while a fund with an education theme holds seven renewable energy companies in its top ten positions, the report said.
The report comes amid concerns over investor losses in funds that misrepresent their holdings. Angry investors swarmed China Evergrande Group’s headquarters in the southern Chinese city of Shenzhen on Monday to demand it repay loans and financial products.
“The interests of the industry have induced fund managers to be short-sighted,” an analyst from a stock brokerage told the paper. Some in the industry believe the means used to make money for investors is irrelevant, the paper added.
Regulators are requesting some funds to explain whether their holdings comply with contractual terms, the report said. It added that many fund managers have carried out self-inspection, and plan to adjust their holdings to meet compliance requirements.
• By Iris Hong
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