UPDATE 1-China's Yinhua to launch $2 bln QDII fund -source

(Adds details, background)

By Helen Ding

SHANGHAI, April 10 (Reuters) - China's Yinhua Fund Management Co plans to launch a fund for subscription on April 21 to raise up to $2 billion for investments in global capital markets, a company source said on Thursday.

This would be the seventh such fund to be launched by a domestic fund house under the country's Qualified Domestic Institutional Investor (QDII) scheme -- aimed at giving domestic residents more investment opportunities and promoting a better balance in China's international payments.

A roadshow has started in major Chinese cities, the source told Reuters, adding that the firm had received regulatory approval to raise up to $2 billion for the product.

A company spokewoman confirmed that Yinhua was preparing to launch a QDII fund -- which will invest no less than 60 percent of its proceeds in overseas mutual funds and target both developed and emerging markets around the world.

Yinhua, which had a total of more than 90 billion yuan ($12.85 billion) in assets under management at the end of 2007, has said it had hired Morgan Stanley (MS.N: Quote, Profile, Research, Stock Buzz) and SEI Investments (Europe) Ltd as its investment advisers for the QDII fund.

Critics said any new QDII funds would be a hard sell right now because of uncertainties in the overseas capital markets as a result of the U.S. subprime debt crisis.

Four major QDII stock funds from Chinese mutual fund firms that raised $4 billion each from domestic investors late last year have fallen sharply below their par value amid a turmoil in the global financial markets.