Europe’s First Smart Beta China A-Shares ETF Launches
China Post Global announced today the launch of the Market Access STOXX® China A Minimum Variance Index UCITS ETF (ISIN LU1750178011). The new ETF implements a minimum variance approach to China’s onshore stock market and is the first smart beta ETF on China to launch in Europe.
The fund will track the performance of the STOXX® China A 900 Minimum Variance Unconstrained AM index which selects and weights stocks listed on the Shanghai and Shenzhen stock exchanges based on their volatility and how heavily they are traded on exchange, with the aim of reducing overall index volatility.
“China has for some time been the primary engine of global growth and there is significant investor demand for China exposure, though in many cases allocations are being held back by concerns about higher volatility,” says Danny Dolan, Managing Director of China Post Global (UK).
“The minimum variance approach works to address these volatility concerns while maintaining sufficient liquidity, aiming to give investors access to higher risk-adjusted returns in the medium- and long term.”
The ETF uses full physical replication and has a total expense ratio (TER) of 0.65%. With its targeted smart beta strategy, it’s intended as a cost-effective alternative to actively-managed funds.
The index was developed together with STOXX Ltd. and currently consists of 135 constituents, with the maximum weight per constituent being capped at 8%. The new ETF makes use of China’s Stock Connect programmes, which enable equities listed in Shanghai and Shenzhen to be traded internationally via the Hong Kong stock exchange. This reduces transaction costs significantly compared to trading locally via the QFII and RQFII quota programmes for investing in mainland Chinese stocks.
The Market Access STOXX® China A Minimum Variance Index UCITS ETF will be listed on the London Stock Exchange, SIX Swiss Exchange, Deutsche Börse and China Europe International Exchange, and registered in the UK, Austria, Germany, Italy, Luxembourg, Netherlands and Switzerland.
Source: China Post Global
Graham Kellen, chief digital officer of Schroders, is leading the advisory panel.
Two-year-old firm has reached more than $180bn daily in notional axes.
Firm releases three new strategies with multiple sub-settings.
The market that independent asset managers can realistically address has risen by 17%.
Chief investment officer at NN IP says digital augmentation of human skill be a differentiator.