Northbound MRF Fund Flow Commentary – Q1 2026

Northbound MRF products sustained their appeal among mainland investors seeking offshore diversification in the first quarter of 2026. Data from the State Administration of Foreign Exchange shows that the cumulative net remittance from the mainland sales of northbound MRFs reached approximately RMB 128 billion (HKD 145 billion) by the end of February 2026, up from RMB 125 billion (HKD 139 billion) at the end of December 2025.

This quarter also saw the introduction of new products, with the China Securities Regulatory Commission approving four additional Hong Kong-domiciled funds for mainland distribution in February: JPMorgan Asia Equity High Income, Taiping Greater China New Momentum Equity, ChinaAMC Select RMB Investment Grade Income, and Fidelity Global Investment Fund - Hong Kong Bond. Notably, this marked Taiping and Fidelity’s MRF debut, signaling their official entry into this growing market. These approvals provide onshore investors with more choices for asset managers and asset classes (specifically HKD Bond), though their mainland sales had not commenced as of end of March 2026.

Overall, northbound MRFs posted positive net inflows in the first quarter of 2026. Allocation funds maintained their positive momentum, attracting HKD 13 billion in new assets. Pictet HK—Pictet Strategic Income, a flexible global-allocation fund, led both one-month and three-month net flows, with HKD 10.67 billion in net subscriptions during the quarter. Asia allocation strategy HSBC Asia Multi-Asset High Income also ranked in the top five in terms of net flows for both the one-month and three-month periods.

Meanwhile, equity funds recorded nearly HKD 10 billion in net inflows in the first quarter of 2026 despite some outflows toward the end of the quarter amid global equity market declines. JPMorgan Asia Equity Dividend, which targets a forward yield 30% above the MSCI AC Asia Pacific ex Japan Index, led equity fund inflows with HKD 6.65 billion over the quarter. The newly added JPMorgan Asia Equity High Income builds on Asia Equity Dividend’s foundation, with an options overlay. The High Income strategy seeks a total income of 7% to 9% over the cycle, generated via a combination of 3% to 4% from investing in dividend-paying companies, and 4% to 5% from writing covered calls.

Conversely, fixed-income products experienced net outflows in the first quarter of 2026. Most northbound MRF bond funds have hit their mainland sales limits and are currently suspended for mainland new sales, effectively limiting subscription access and constraining inflows. JPMorgan Global Bond led both one-month and three-month outflows. The Asian bond category broadly suffered from outflows; however, BOCHK All Weather Asian Bond bucked the trend with HKD 1.21 billion in net inflows during the first quarter of 2026, ranking fourth in the quarterly net inflows. The fund saw a rush of inflows after resuming mainland subscriptions on Jan. 27, 2026, only to be suspended again starting Feb. 5 due to quota limits. It reopened on March 11 and continued to attract strong investor interest.

At the fund house level, Pictet led in both one-month and three-month inflows, driven by strong subscriptions to its sole flagship MRF product, Pictet HK - Pictet Strategic Income, which posted by far the strongest quarterly inflows. BEA, Bank of China, and Schroders followed, each with inflows exceeding HKD 1 billion in the first quarter of 2026. HSBC and JPMorgan ranked at the bottom, partly attributable to outflows from their larger bond fund lineups, which more than offset inflows from equity and allocation funds.

As of the end of March 2026, JPMorgan’s northbound MRF product assets under management stood at HKD 84.55 billion, securing a market share of nearly 40%, thanks to its early-mover advantage and broad product suite despite recent flow challenges. HSBC followed closely, with its MRF product assets at HKD 31.15 billion. Meanwhile, Pictet and Value Partners’ MRF product assets exceeded HKD 20 billion.

All flow and assets under management figures provided in this article are at the fund level.

Data lists used in this article are based on data availability. Should any fund house wish to submit timely data, please feel free to contact Morningstar.