CMG, SSB Citi try to lure Hong Kong's savings dollars

CMG First State Investments and SSB Citi Asset Management have both launched funds aimed at parting cautious Hong Kong residents from their bank savings. Both offer prospective investors an opportunity to bet on health and biotechnology stocks with limited risk to their capital.

CMG's guaranteed health and biotechnology fund plans to invest 80% of the fund in treasury bonds and the remaining 20% in 43 actively managed drug, biotech, specialty pharmaceutical and medical technology stocks. Of these, 60% will be pharmaceutical stocks and 14% biotechnology stocks. As long as investors don't withdraw their money before the fund matures in March 2004 they will get back, at a minimum, their principal, minus annual management fees of 2% to 2.5%. If the health stocks get wiped out, investors will at most lose the opportunity cost of investing in something else – in the case of bank deposits, a compound interest rate of about 20%. The fund carries no up front fee.