Premia Partners debuts multi-factor China A-shares ETFs

Oct 26th, 2017 | By | Category: Equities

Hong Kong-based asset manager Premia Partners has launched two smart beta China ETFs which utilize a fundamental multi-factor approach to select Mainland China A-share equities. The funds have been listed on the Hong Kong Stock Exchange.

Premia Partners debuts multi-factor China A-shares ETFs

The two funds are the first ETFs to provide physically replicated multi-factor exposure to Chinese A-shares.

The ETFs track CSI smart beta indices provided by Caixin Rayliant Smart Beta (Caixin Rayliant), led by Dr. Jason Hsu, chairman and CIO of Rayliant Global Investors, and co-founder and vice chairman of Research Affiliates.

The Premia ETFs leverage Caixin Rayliant’s academic research, which identifies several equity factors – including value, quality, low volatility, size – as having the potential to outperform the broader A-shares equity market over the long term. The fundamental beta approach also introduces a buy-low, sell-high discipline into factor investing.

The Premia CSI Caixin China Bedrock Economy ETF (Ticker: 2803 HK) tracks the CSI Caixin Bedrock Economy Index, providing exposure to leading companies that drive the mainstream economy of China, based on economic size, financial health and low risk characteristics.

The Premia CSI Caixin China New Economy ETF (Ticker: 3173 HK) tracks the CSI Caixin New Economic Engine Index, providing exposure to leaders from new economy industries, selected based on non-fixed asset size, financial health and growth characteristics.

The ETFs consist of approximately 300 Shanghai and Shenzhen listed stocks each, and utilize the Stock Connect Program to physically replicate their desired exposure. Each fund has a total expense ratio of 0.50%.

“We are very excited to partner with Caixin Rayliant in offering these two ETFs,” said Rebecca Chua, managing partner of Premia Partners. “Dr. Hsu has long been the leading voice in the smart beta and factor investing world, with his work at Research Affiliates widely recognized and adopted by investors globally.

“We are honoured to be able to leverage on him and the Caixin Rayliant team’s insights and expertise in bringing to market the world’s first fundamental multi-factor China A-shares ETFs.  These strategies are based on robust academic research into China factor performance and are the first to capture the nuances of mainstream and new economy Mainland markets instead of following a narrow market capitalization approach.”

Dr. Jason Hsu added: “We are so pleased to be working with Premia Partners on the NEI and BEI ETFs. Premia shares our passion for bringing to market state of the art investment strategies at low cost that generate long term value for investors. Particularly in Asia, where there is a culture of high fees and short-term performance selling, such strategies are in great need and Premia is taking a lead to fill the gap. These two ETFs offer the opportunity of excess return through low cost exposure to systematic sources of returns.”

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