Cathay and MF to launch Taiwan futures fund

By Faith Hung and Yvette Chen

TAIPEI (Reuters) - Cathay Financial (2882.TW) and MF Global (MF.N) will launch Taiwan's first futures fund, with plans to raise T$7 billion (142.75 billion pounds) for the fund in May, an executive said on Friday.

The new fund will invest in five funds from Man Investments, a unit of MF Global, the world's biggest futures and options broker, after Taiwan changed regulations last year to allow such funds.

"Futures funds were the only investment globally that reaped returns in the tough market last year," said Jeff Chang, president of Cathay Securities Investment Trust, the fund arm of Taiwan's top listed financial holding firm, Cathay Financial.

"We will start investing as soon as we get regulatory approval in May," he told Reuters, adding that the fund would aim for a 10 percent annual return rate over the next few years.

Such futures funds are sparking interest in Taiwan's fund industry, which oversees more than T$3 trillion in client assets.

The fund firm tied to Polaris Securities (2854.TW) is planning to launch a similar fund, while Yuanta Financial (2885.TW) is evaluating whether to introduce one.

Some of Man Investment's futures funds posted returns of more than 20 percent in 2008, far outperforming the Standard & Poor's 500 Index .SPX, which plunged more than 50 percent during the same period, Chang said.

Shares of Cathay Financial closed 2.76 percent lower on Friday, while MF Global was down 2.62 percent in New York trading on Thursday.

(Editing by Jacqueline Wong and Ken Wills)