Source, a Europe-based asset manager and provided of exchange traded funds, and Hong Kong-based CSOP Asset Management have filed plans with the Securities and Exchange Commission to possibly list a China A-shares ETF in the U.S.
The ETF will aim to track the performance of the FTSE China A50 Index, which comprises the top 50 companies in mainland China. The index is a recognised benchmark for ‘A shares’ and has been calculated by FTSE since 2003. The intention of Source and CSOP to enter the US ETF market follows a similar, successful, co-operation in Europe, according to a statement issued by the firms.
A-shares ETFs have risen to prominence in recent months with the November 2013 debut of the db X-trackers Harvest CSI 300 China A-Shares Fund (NYSEArca: ASHR), a fund that has $209.4 million in assets under management despite recent weakness in Chinese equities.
Earlier this month, Van Eck, the parent company of Market Vectors, said it entered into an agreement with China Asset Management, China’s largest mutual fund manager by assets under management that allowed for the Market Vectors ChinaAMC A-Share ETF (NYSEArca: PEK) to join ASHR as the only two U.S.-listed ETFs that hold A-shares equities, not a basket of derivatives. [Market Vectors China ETF Makes A-Shares Leap]
CSOP is the largest RMB Qualified Foreign Institutional Investor (“RQFII”) asset manager globally, according to the statement. RQFII partnerships are essential for ETF issuers because RQFII status means an asset manager meets Chinese regulatory requirements to be a foreign owner of A-shares.