First batch after new regulations! 4 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, on February 27, the first batch of four mutual recognition funds received approval from the China Securities Regulatory Commission (CSRC) following the new mutual recognition fund regulations.

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 time since the revised “Hong Kong Mutual Recognition Fund Management Regulations” were issued on January 1, 2025, that products have been approved on the mainland.

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

First Batch After New Regulations! Four Mutual Recognition Funds Approved

On the evening of February 27, market sources indicated that after the release of the 2025 mutual recognition fund regulations, the first four mutual recognition funds 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. Morgan Asian High Dividend Stock Fund, Fidelity Global Investment Fund - Hong Kong Bond Fund, and Taiping Greater China New Power Stock Fund chose HSBC as the custodian; Huaxia Select RMB Investment Grade Income Fund and Taiping Greater China New Power Stock Fund 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 Funds 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 transform global allocation capabilities into specific products that meet Chinese investors’ needs, offering more diverse and professional investment options for domestic investors.”

Meeting Cross-Border Wealth Management Needs of Investors in Both Regions

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

For example, the mutual recognition funds approved by the CSRC for northbound investment can be managed by Hong Kong asset management firms but sold by mainland asset management firms. Specifically, 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 can be sold by Morgan Asset Management, Fidelity Funds, Huaxia Fund, and Taiping Asset Management in mainland China.

Industry analysts 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 areas:

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

2. Appropriately relax the transfer of investment management authority restrictions for 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 interest is the relaxation of the sales ratio limit from 50% to 80%, which is expected to better unlock the sales potential in the mainland market. Since 2015, the overall sales of Hong Kong mutual recognition funds in mainland China have shown net subscriptions, especially since 2024, with strong demand. The sales scale in mainland China has continued to grow. Before the new regulations, many products reached the 50% sales cap and temporarily halted sales in the mainland; after the new rules took effect, the quota was released, leading to a rapid, phased increase 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 in January 2026, the Hong Kong mutual recognition fund market exhibited a divergence: equity and hybrid funds attracted capital, while bond funds experienced outflows. Supported by steady gains in Asian and global stock markets, equity and mixed funds performed well in terms of capital inflows. Conversely, bond funds saw net outflows due to increased market risk appetite and restrictions on some products’ sales in mainland China.

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

Bond funds, on the other hand, experienced overall net outflows. Increased risk appetite and restrictions on some products’ mainland sales, due to nearing the sales cap, contributed to the outflows. Morgan International Bond Fund had 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 and 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.