CSOP Asset Management is not a household name in the U.S., but the Hong Kong-based asset manager could change that with today’s launch of its first U.S-listed exchange traded fund, the CSOP FTSE China A50 ETF (NYSEArca: AFTY).
The CSOP FTSE China A50 ETF is first ETF to be listed independently in the U.S. by a Chinese asset management company. Previous versions of A-shares ETFs to list in the U.S. have been partnerships between a U.S.- or Europe-based ETF issuer and a China-based asset manager. Those partnerships are pivotal to ETF issuers being able to offer U.S. funds that feature physical access to China’s A-shares because a Renminbi Qualified Foreign Institutional Investor (RQFII) meets Chinese regulatory requirements to be a foreign owner of A-shares. [A-Shares Gain a Following]
“CSOP was founded in 2008 as the first offshore asset manager set up by a regulated asset management company in China,” according to the firm’s web site.
The firm’s first U.S.-listed ETF enters a growing segment of the ETF offering U.S. investors to physical A-shares. CSOP will compete with several issuers of rival A-shares ETFs, notably Deutsche Asset & Wealth Management, the issuer behind the Deutsche X-trackers Harvest CSI 300 China A-Shares ETF (NYSEArca: ASHR).
ASHR, which debuted in November 2013, was the first ETF to trade in the U.S. to offer investors physical A-shares access. It is now the largest with over $1 billion in assets under management. Other competitors include the KraneShares Bosera MSCI China A-Shares ETF (NYSEArca: KBA) and the Market Vectors ChinaAMC A-Share ETF (NYSEArca: PEK). [More in Store for A-Shares Rally]
For its part, the CSOP FTSE China A50 ETF will not show up to the U.S.-listed A-shares ETF party empty handed. The listing recorded the largest initial capital investment of more than $237 million in assets and 13.96 million shares, the largest initial investment among all U.S.-listed equity ETFs since 2007, according to CSOP. That makes the new ETF already the second-largest A-shares ETF trading on a U.S. exchange.
As its name implies, AFTY will track the widely followed FTSE China A50 Index, which tracks the 50 largest stocks listed in Shanghai and Shenzhen. In addition to China, ETFs tracking the FTSE China A50 Index trade in Hong Kong, London and Tokyo.
China exchange traded funds benchmarked to indexes provided by U.K.-based FTSE Group topped a combined $24 billion in assets under management, said the index provider at the end of last year.
CSOP is the largest RQFII asset manager in the world and had $7.86 billion in assets under management as of Aug. 30, 2014.
FTSE China A50 Index
Charts Courtesy: CSOP, FTSE