(Yicai Global) July 26 -- BlackRock, the world's biggest asset manager, will soon start its first Chinese private fund which it has successfully registered and filed with local authorities. 

The fund will begin operating late this month or early next month and will invest entirely in A-shares after completing financing, its promotional materials for investors that National Business Daily acquired from CITIC Securities show. 

With the opening up of China's financial markets, foreign private funds have become a market focus. China A-Share Opportunities Private Fund 1, BlackRock's first private fund issued domestically, formed on May 11 and was filed with the Asset Management Association of China on June 5.

The new fund will serve Chinese investors and mainly target institutional investors and high net worth individuals, BlackRock said.  

With the A-share market experiencing substantial corrections this month, the reason why the fund will fire up now is because BlackRock is upbeat about the current A-share market and is very confident in its investment model. 

BlackRock found small- and mid-caps were undervalued due to insufficient research into fundamentals by and attention from investors, it said. It therefore upped its holdings of various quality small- and mid-caps and achieved excellent returns in the first half. It also found some Shanghai Stock Exchange 50 Index were excessively sought after by the market earlier this year and thus reduced its allocation to these. 

Foreign private funds have begun to push into the Chinese market since last year, with 11 foreign institutions including Fidelity and UBS now registered as private equity investment fund managers.

Editor: Ben Armour