First batch within two years after the new regulations! Four mutual recognition funds approved, with Morgan Asset Management and three others securing entry tickets

Financial Associated Press, February 28 — (Reporter Yan Jun) — According to industry insiders exclusively, on February 27, following the new mutual recognition fund regulations, the first batch of four mutual recognition funds received approval from the China Securities Regulatory Commission within the year.

These four products are: Morgan Asian High Dividend Stock Fund, Fidelity Global Investment Fund - Hong Kong Bond Fund, Huaxia Select RMB Investment Grade Income Fund, and Taiping Greater China New Power Stock Fund, consisting of two equity funds and two bond funds. This marks the first batch of products approved within the mainland after the revised “Hong Kong Mutual Recognition Fund Management Regulations” were issued on January 1, 2025.

Industry experts note that the approval of mutual recognition funds will further enrich the cross-border investment toolkit, providing new options for mainland Chinese residents to participate in overseas capital markets and optimize asset allocation structures.

First batch within the year after new regulations! 4 mutual recognition funds approved

On the evening of February 27, market sources indicated that after the release of the new mutual recognition fund regulations in early 2025, the first four mutual recognition funds of the year received approval. According to Financial Associated Press, these are two equity funds—Morgan Asian High Dividend Stock Fund and Taiping Greater China New Power Stock Fund, with Hong Kong management fees of 1.5%; and two bond funds—Fidelity Global Investment Fund - Hong Kong Bond Fund and Huaxia Select RMB Investment Grade Income Fund, with Class A shares Hong Kong management fees of 0.75%.

HSBC and Bank of China Hong Kong are the custodians, with Morgan Asian High Dividend Stock Fund, Fidelity Global Investment Fund - Hong Kong Bond Fund, and Huaxia RMB Investment Grade Income Fund choosing HSBC as custodian; while Huaxia and Taiping Greater China New Power Stock Funds are custodied at Bank of China Hong Kong.

Notably, Morgan Asset Management and Fidelity Funds, two wholly foreign-owned public fund managers, received approval for new products. Fidelity Fund also secured its first overseas investment product registered through the mutual recognition mechanism.

“With the steady advancement of RMB internationalization and the increasing global allocation needs of Chinese investors, cross-border investment is gradually becoming an important part of residents’ asset allocation. The approval of these mutual recognition fund products is a key step for Fidelity’s cross-border business expansion in China,” said Sun Chen, General Manager of Fidelity Fund Management (China) Co., Ltd. “Leveraging Fidelity’s mature global research system and extensive market coverage, we can translate global allocation capabilities into specific products that meet Chinese investors’ needs, offering more diverse and professional investment options domestically.”

Meeting cross-border wealth management needs of investors in both regions

The term “mutual recognition” refers to funds that meet certain conditions in mainland China and Hong Kong, which, after obtaining approval or licensing from regulatory authorities in both regions through legal procedures, can be sold publicly in each other’s markets.

Taking the recent approval of the northbound mutual recognition funds by the mainland CSRC as an example, the fund managers are Hong Kong asset management institutions, but sales can be conducted by mainland asset management firms. Specifically, Morgan Asian High Dividend Stock Fund, Fidelity Global Investment Fund - Hong Kong Bond Fund, Huaxia RMB Investment Grade Income Fund, and Taiping Greater China New Power Stock Fund can be sold by Morgan Asset Management, Fidelity Funds, Huaxia Fund, and Taiping Asset Management in mainland China.

Industry insiders believe that following the approval and issuance of these new products, a sales surge is expected.

The regulations related to Hong Kong mutual recognition funds date back to May 22, 2015, when the CSRC issued the “Interim Regulations on the Management of Hong Kong Mutual Recognition Funds,” which officially came into effect on July 1 of the same year. After a decade, on December 20, 2024, the CSRC announced the revision of the “Regulations on the Management of Hong Kong Mutual Recognition Funds,” which will be implemented from January 1, 2025.

The revised mutual recognition fund regulations optimize the original policies in three aspects:

1. Moderately relax the sales ratio limit of mutual recognition funds between the two regions from 50% to 80%.

2. Appropriately loosen the restrictions on the transfer of investment management functions of mutual recognition funds.

3. Expand the types of mutual recognition fund products to include “other fund types recognized by the CSRC,” leaving room for further expansion.

Of particular market attention is the relaxation of the sales ratio limit of Hong Kong mutual recognition funds from 50% to 80%, which better releases their sales potential in the mainland market. Since 2015, the overall sales of Hong Kong mutual recognition funds in the mainland have shown net subscriptions, especially since 2024, with strong demand, the sales scale has continued to grow. Before the new regulations, many products reached the 50% sales cap and suspended sales in the mainland; after the new rules took effect, the quota was released, leading to phased rapid growth in sales.

Morningstar China Hong Kong Mutual Recognition Fund Monthly Report: Morgan’s Hong Kong Mutual Recognition Fund reaches 84 billion yuan, leading the market

On February 27, Morningstar China released its January monthly report on mutual recognition funds, showing that as of January 2026, the Hong Kong mutual recognition fund market exhibited a divergence: equity and mixed funds attracted inflows, while bond funds experienced outflows. Benefiting from steady gains in Asian and global stock markets, equity and hybrid funds performed well in attracting capital. Conversely, bond funds saw net outflows due to increased risk appetite and restrictions on some products’ sales in the mainland.

In terms of net inflows, the Pictet Strategies Income Fund was the top net inflow for January among hybrid funds, with 4.753 billion yuan, significantly ahead of other Hong Kong mutual recognition funds. Morgan Asian Dividend Fund had the highest net inflow among equity funds, with 3.909 billion yuan.

Bond funds generally experienced net outflows. Increased risk appetite and restrictions on some products’ mainland sales, due to nearing the sales cap, led to outflows. Morgan International Bond Fund saw the largest outflow, with 1.952 billion yuan.

As of January 2026, Morgan’s Hong Kong mutual recognition fund assets under management reached 84 billion yuan, holding over 40% of the market share, maintaining its leading position. HSBC and Value Partners held 30.1 billion yuan and 20.4 billion yuan respectively, ranking second and third. Other notable players like Value Partners, Pictet, East Asia Fubon, and Schroders each managed mutual recognition funds exceeding 1 billion yuan, illustrating a market with a stable top tier and fierce competition in the middle tier.