Deutsche Asset & Wealth Management (DAWM), the exchange traded funds unit of German banking giant Deutsche Bank (NYSE: DB), said Friday it is increasing creations of new shares in the Deutsche X-trackers Harvest CSI 300 China A-Shares ETF (NYSEArca: ASHR).
ASHR, the largest U.S.-listed ETF offering investors exposure to China’s A-shares equities traded on the onshore markets in Shanghai and Shenzhen, will see its creation limit lifted to 25 creations per day from one effective March 2, according to statement from DAWM.
From September through December, DAWM was forced to limit creations in ASHR three times because strong investor demand for the fund was forcing it to to bump up against their respective Renminbi Qualified Foreign Institutional Investor (RQFII), which allows the funds to purchase A-shares equities. [Another Creation Limit for an A-Shares ETF]
The most recent creation limit for the ETF went to effect on Jan. 21, marking the third DAWM DAWM and ASHR’s sub-advisor, Harvest Global Investments Limited, have been quick to land larger RQFII quotas to get ASHR’s larger creation limits. In all three instances of ASHR creation limits, DAWM and Harvest Global were able to obtain larger RQFII quotas in a matter of weeks.
The $1.05 billion ASHR, the fourth-largest U.S.-listed China ETF, has an RQFII quota of 6.19 billion renminbi, according to DAWM data.
Creation limits often lead to ETFs, particularly those with exposure to markets that are closed during the U.S. trading day, trading at premiums to net asset value. Professional traders then look to profit from the gap between the ETF’s market price and lower NAV by shorting the ETF. Since the start of 2015, ASHR has traded at a premium to its NAV in 26 days, according to DAWM data. [Shorts Eye A-Shares ETF]
DAWM also said a previously announced creation limit on Deutsche X-trackers Harvest CSI 500 China A-Shares Small Cap Fund (NYSEArca: ASHS), the small-cap answer to ASHR, has been increased as well. In November, DAWM ASHS would be subject to one creation per day, but that number has also been increased to 25 creations per day.
The $27 million ASHS is one of 2015’s best performing China ETFs with a year-to-date gain of 12.6%.
Deutsche X-trackers Harvest CSI 300 China A-Shares ETF
