China Universal launches its first RQFII ETF
04 July 2013
News, Asia, China, Global
By Hui Ching-hoo
China Universal Asset Management (HK), an affiliate of Shanghai-based fund giant China Universal, broke into the RQFII ETF market with the launch of its first index product, the C-Shares CSI 300 Index ETF on July 3.
The firm, along with HuaAn, Bosera, and Da Cheng, is among the latest RQFII institutions to tap into the niche market, following in the steps of established Chinese asset managers E Fund, China AMC, Harvest, and CSOP.
Jian Yang, managing director and head of index and quantitative investment at China Universal Asset Management (HK), tells Asia Asset Management that he sees enormous potential in the market as an increasing number of investors demand these type of products to access the Mainland market, and as the RMB continues to gain popularity among international investors.
Furthermore, index provider MSCI is considering including the China A-shares market in its MSCI Emerging Markets Index. The possible inclusion will generate new opportunities for the RQFII ETF providers, he adds.
The initial quota of the C-Shares CSI300 Index ETF is 2 billion RMB (US$317 million). Mr. Yang notes that the benchmark CSI 300 Index is one of the most representative indexes in China and displays both the highest market-cap and liquidity. The index covers sectors that represent the future growth of China, such as consumption and health care, while its structure is considered more balanced than its peers.
“The ETF is institutional focussed and displays full replication of its underlying stocks to minimise tracking error. It also offers dual counters for RMB and HK dollar trading,” he says.
Mr. Yang goes on to say that the product features a low total expense ratio, at 70 basis points, to help investors access the Mainland market more effectively.
China Universal Asset Management (HK) has been awarded a total of 3.1 billion RMB (US$490 million) in RQFII quotas from the State Administration of Foreign Exchange.
The remaining 1.1 billion RMB, after deducting 2 billion RMB for the RQFII ETF, was allocated to its first RQFII product the CUAM RMB Bondplus Fund, which was launched last January.
Mr. Yang notes that the firm has numerous options for any additional RQFII quotas: “We might allocate new quotas to existing products or use them to launch sub-index products such as sector ETFs.”
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