(Yicai Global) March 19 -- China's mutual fund companies aim to provide a channel for ordinary investors to access Shanghai's upcoming science and technology innovation board by rolling out new products.

The securities regulator has received applications for 54 new mutual funds from 32 providers since it started accepting submissions on Feb. 22, Yicai Global has learned.

Mutual funds are paying close attention to the sci-tech board since they have become the most attractive way for ordinary investors to access it since the Shanghai Stock Exchange, which will host the new venue, issued requirements that include a minimum account balance and proven investment experience.

Twenty-two of the 54 new funds include the phrase "sci-tech innovation board" in their names, signaling that they will invest exclusively in stocks listed on that market. The other 32 have wording such as "scientific and technological innovation," indicating that they may be used for buying shares on other bourses such as Shenzhen's growth enterprises venue ChiNext.

Up to 250

The number of sci-tech board-related funds could increase to 250 if each of China's 65 mutual funds that hold stocks worth over CNY2 billion (USD300 million) filed to start four new funds, according to an estimate from China Galaxy Securities.

One mid-sized Shenzhen firm does not plan to launch a new fund at the moment, but does intend to participate in the board through its existing science and technology-focused offering, according to an employee in its marketing department.

All mutual funds can participate in the board but they should remain cautious, an investment director from another Shenzhen fund said, adding that the companies need to consider pricing, especially of businesses that have yet to turn a profit. They should also ponder the impact of limits on daily share price movements as well as potential low market liquidity, he added.

Hybrid Funds

Equity funds comprise just four of the 54. The bulk is hybrids, with 14 mostly geared toward stocks and 36 targeting different securities. This means fund managers can also invest in different asset classes such as stocks, bonds and currencies on top of companies listed on the board to diversify risk.

Thirty-seven of the new funds would be open-end schemes, and 17 closed. The new board, which will have no pricing limits for the first five trading sessions after a listing and allow rises and falls of up to 20 percent a day thereafter, will have stricter rules for open-end funds since big investments or withdrawals could occur if shares fluctuate sharply, according to analysis done by Galaxy.

Editor: William Clegg