Qualified Domestic Institutional Investor - QDII

DEFINITION of 'Qualified Domestic Institutional Investor - QDII'

An institutional investor that has met certain qualifications to invest in securities outside its home country. The most popular QDII program comes from the People's Republic of China, where the main regulatory body (the China Securities Regulatory Commission) may grant a limited avenue for institutional investors such as banks, funds and investment companies to invest in foreign-based securities.

The overall restrictions on ownership are in place for several reasons, including currency conversion concerns in nations where the currency is not free-floating.

BREAKING DOWN 'Qualified Domestic Institutional Investor - QDII'

QDII programs are used in places where the capital markets are not yet completely open to all investors. For example, any institutional investor in China that obtains approval to be a QDII may invest up to 50% of net assets into allowable foreign securities, so long as not more than 5% is invested in any one security. Only certain foreign markets are eligible for investment, including Britain and Hong Kong.

The QDII program in China was set up partly to provide the growing number of domestic investors with a place to park their funds; only a few hundred local stocks are listed on the Shanghai and Shenzhen stock exchanges.

RELATED TERMS
  1. China Concepts Stock

    The stock of a company whose assets or earnings have significant ...
  2. Shanghai Stock Exchange

    The largest stock exchange in mainland China, the Shanghai Stock ...
  3. Canadian Securities Institute - ...

    Canada's leading provider of professional credentials and compliance ...
  4. Foreign Institutional Investor ...

    An investor or investment fund that is from or registered in ...
  5. Investment Fund

    A supply of capital belonging to numerous investors that is used ...
  6. Assuming Institution

    A healthy financial institution that purchases the assets of ...
Related Articles
  1. Markets

    China’s Stock Markets vs U.S. Stock Markets

    The U.S. and China are home to the biggest stock markets in the world, but they are very different in a number of important ways.
  2. Markets

    Top 6 Factors That Drive Investment In China

    FDI in China surpassed $100 billion in 2010, certain key factors drive foreign direct investment.
  3. ETFs & Mutual Funds

    Top 5 Chinese Mutual Funds (MCDFX, FHKCX)

    Learn about some of the most popular and best performing mutual funds that offer investors exposure to the important emerging market economy of China.
  4. Managing Wealth

    A Brief Guide To Institutional Investing

    Institutional investors are organizations that manage assets on others' behalf. They include pension funds, investment companies, insurance firms, endowments and private foundations.
  5. Investing

    How To Play The Upcoming China Surge

    Few countries trade with so much volatility in investor sentiment as China. Investors are manic about watching economic reports from the world's second largest economy, and the slightest change ...
  6. Investing

    Going For The Trifecta On The China Trade

    Few countries trade with so much volatility in investor sentiment as China. Investors are manic about watching economic reports from the world's second largest economy, and the slightest change ...
  7. Managing Wealth

    Broadening Your Portfolio's Borders

    Find out what type of international fund might suit your needs in gaining exposure to foreign markets.
  8. Investing

    Institutional Investors And Fundamentals: What's The Link?

    Big-money sponsorship might make a company look good, but it's not always a reliable gauge of stock quality.
  9. Markets

    Deconstructing The Chinese Stock Market

    China's stock market was in the news this week for its wild swings. What caused the swings and will they have a material impact on US stock markets?
  10. ETFs & Mutual Funds

    FXI: iShares China Large-Cap ETF

    Learn about iShares FTSE/Xinhua China 25 and its asset allocation and how investing in this fund comes with heightened risks of emerging market risk.
RELATED FAQS
  1. What are some examples of a Foreign Institutional Investor (FII)?

    Discover some examples of foreign institutional investors, and learn information about the nature of foreign institutional ... Read Answer >>
  2. Is there a limit to how many stocks and/or bonds an interested investor can buy? ...

    Assuming the question primarily relates to the issuers of stocks and bonds, the simple answer is no. There are no regulatory ... Read Answer >>
  3. What's the difference between primary and secondary capital markets?

    Learn how in the primary capital market, securities are issued for the first time, while in the secondary market, investors ... Read Answer >>
  4. How does FINRA differ from the SEC?

    With all the financial organizations out there, knowing what they all do can be as complicated as knowing where to invest. ... Read Answer >>
  5. What are the major categories of financial institutions and what are their primary ...

    Understand the various types of financial institutions that exist in today's economy, and learn the purpose each serves in ... Read Answer >>
  6. What is the difference between a global fund and an international fund?

    In the English language, "global" and "international" tend to be used interchangeably - hence the confusion in the investing ... Read Answer >>
Hot Definitions
  1. Glass-Steagall Act

    An act the U.S. Congress passed in 1933 as the Banking Act, which prohibited commercial banks from participating in the investment ...
  2. Quantitative Trading

    Trading strategies based on quantitative analysis which rely on mathematical computations and number crunching to identify ...
  3. Bond Ladder

    A portfolio of fixed-income securities in which each security has a significantly different maturity date. The purpose of ...
  4. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  5. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  6. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
Trading Center