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Deutsche Asset & Wealth Management (DeAWM) and Harvest Global Investments are set to launch Europe’s first direct, physical replication exchange-traded fund (ETF) tracking China’s CSI 300 A-shares index.
The db x-trackers Harvest CSI300 Index UCITS ETF (DR) is available for investment from January 7th and will list on the London Stock Exchange with the ticker code ASHR and on the Deutsche Börse with code RQFI on January 16th.
The fund is the first UCITS-compliant physically replicated China A-shares ETF on the CSI 300, and the first of its kind to be given such approval by a European regulator. It follows the successful listing of the physically replicated db X-trackers Harvest CSI 300 China A-Shares ETF (ASHR) in New York in November, which represented the first direct replication A-shares ETF to be listed outside of China.
The NYSE Arca-listed ETF has generated significant interest and has quickly garnered strong inflows – the fund raised over $100 million in initial investment, and by the end of 2013 had broken the $200 million in assets mark.
Reinhard Bellet, DeAWM’s Head of Passive Asset Management, commented: “Providing investors with the first European direct investment ETF on China’s key A-shares equity benchmark is a major achievement, and can be seen as a significant step in opening up the world’s second largest economy to European investors.”
The CSI300 Index tracks the performance of the 300 largest and most liquid A-shares stocks.
A-shares are listed on the Shanghai and Shenzhen stock exchanges, trade in Chinese renminbi and are subject to foreign ownership restriction. However, they are generally regarded as the equities that most comprehensively represent the Chinese economy – A-shares represent over 75% of Chinese equity market capitalisation, covering more than 2,000 companies across all industry sectors.
Only foreign investors approved by China’s regulator as Qualified Foreign Institutional Investors (QFII) or Renminbi Qualified Foreign Institutional Investors (RQFII) can invest in A-shares. Harvest Global Investments, a subsidiary of Deutsche Bank’s Chinese asset management joint venture, Harvest Fund Management, has RQFII status, which grants it an A-shares quota.
Choy Peng Wah, Chief Executive of Harvest Global Investments, said: “The listing of our physical replication ETF tracking the CSI 300 Index in the United States has been rightly seen as ground-breaking, and we are pleased to follow this up by bringing this opportunity to European investors under the UCITS regime.”
With over $50 billion in assets under management globally, the Harvest Group is one of the oldest and most established asset management firms in China. As well as managing the largest China bond fund in Europe, the Harvest Group also manages the world’s largest physical replication China A-Shares ETF, the Harvest CSI 300 Index ETF (159919), which is listed in China and currently has approximately $5 billion in assets.
In July 2012 DeAWM listed Europe’s first ETF providing exposure to the CSI 300 Index – namely the db X-trackers CSI 300 Index ETF (XCHA). This swap-based, indirect replication ETF has been highly successful, with currently around $950 million in assets under management. The new physical offering will appeal to additional segments of the investor base, and adds to DeAWM’s growing pool of physical replication ETFs – DeAWM announced in December that it would convert a number of its current ETFs from indirect to direct replication, thereby becoming one of Europe’s largest providers of physical ETFs.