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Lyxor, Europe’s third largest provider of exchange-traded funds, has extended its range of emerging markets ETFs with the launch of the Lyxor UCITS ETF CSI 300 A Shares (CSIL).
The new fund has been listed on the London Stock Exchange and offers international investors access to the China A-shares market.
The fund is linked to the CSI 300, an index consisting of the 300 stocks with the largest market capitalisation and liquidity from the entire universe of A-share companies traded on China’s Shanghai and Shenzhen stock exchanges.
Traditionally most international investors gain exposure to China through freely accessible offshore Hong Kong stocks, so-called H-shares, while access to the onshore stock market (A-shares) remains restricted and controlled by quotas.
Although some foreign investors have gained physical exposure to China A-shares via certain approved funds, such as those with Qualified Foreign Institutional Investors status, these funds are typically highly oversubscribed. The Lyxor fund gets around this problem by replicating the index via a total return swap, a so-called ‘synthetic replication’ method.
Paris-based Lyxor, which has more than $41 billion in ETF assets under management, was among the first to offer access to the Chinese market through H-shares and has been managing products in this market since 2006. Its Lyxor ETF China Enterprise (HSCEI) is the largest ETF in Europe providing exposure to Chinese corporates.
The new CSI 300 fund has been priced competitively. With a total expense ratio (TER) of 0.40% it is 10 basis points cheaper than what is bound to be seen as its main rival, the db X-trackers CSI300 UCITS ETF (XCHA), which has a TER of 0.50%. Unveiled by Deutsche Asset & Wealth Management in June 2011, this fund has gathered £585 million in assets.