The Hong Kong Securities and Futures Commission (SFC) issued a circular on 3 September 2026 providing guidance to funds that are authorized by the SFC for offering to the public in Hong Kong with direct or indirect exposure to private market assets, including private credit and private equity.
The SFC highlights the risks associated with private market assets exposure and expects fund managers to ensure that investors receive clear and balanced information on the nature and extent of such exposure and its associated risks.
Funds with direct or indirect exposure to private market assets are subject to enhanced disclosure requirements in their offering documents and, where appropriate, their Key Facts Statement (KFS). The disclosures should provide sufficient information on the exposure, underlying assets and key risks.
A fund will generally be considered a complex product where its aggregate direct and indirect exposure to private market assets represents 50% or more of its NAV. The SFC may also classify a fund as complex below this threshold, considering factors such as the fund’s investment strategy, portfolio composition, liquidity and overall risk profile. Complex product requirements, including applicable suitability obligations, will then apply.
The SFC also reiterates the importance of target market identification and appropriate distributor selection, including ensuring that distributors have sufficient product knowledge and understand the relevant risks and product classification.
For existing SFC-authorized funds, fund managers are expected to review their products and take appropriate action where required, including updating fund documentation and ensuring appropriate communication with distributors. New funds with private market exposure may be subject to closer SFC scrutiny during the authorization process.
The SFC circular is available in English.
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