Small-Cap A-Shares ETF Boost Creation Limit

Deutsche Asset & Wealth Management (Deutsche AWM), the exchange traded funds arm of German banking giant Deutsche Bank (NYSE: DB), said Tuesday it has boosted the creation limit for the Deutsche X-trackers Harvest CSI 500 China A-Shares Small Cap Fund (NYSEArca: ASHS).

ASHS “will increase the number of creation units that it will accept from one creation to five creations per day, effective” Wednesday April 8, according to a statement issued by Deutsche AWM.

ASHS and its large-cap counterpart, the popular Deutsche X-trackers Harvest CSI 300 China A-Shares ETF (NYSEArca: ASHR), have at various points during their trading histories been forced to limit creations of new sharesbecause strong investor demand for the funds was forcing the products 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 time Deutsche AWM 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, Deutsche AWM and Harvest Global were able to obtain larger RQFII quotas in a matter of weeks. The issuer lifted ASHR’s creation limit to 25 creations per day on March 2. [A-Shares ETF Gets Increased Creation Limit]

ASHS, which debuted in May 2014, now has an RQFII quota of 345 million renminbi, according to Deutsche AWM data.

It is easy to see why demand for ASHS has been robust this year. Year-to-date, the ETF is up 49.3%, trailing only the rival Market Vectors ChinaAMC SME-ChiNext ETF (NYSEArca: CNXT) in terms of year-to-date performance. Since coming to market last May, ASHS has more than doubled.