ETF NEWS - ULTUMUS

China Access & Small Cap

Written by Ultumus | 26 January 2020

Hong Kong

China AMC lists Stock Connect ETF for foreign investors wanting A shares

Chinese asset manager China AMC is listing a new ETF that covers the progressive partial inclusion of A shares in the MSCI Emerging Markets Index over time. The China AMC MSCI China A Inclusion Index ETF (83197) is designed for global investors wanting to buy A shares, which might become a possibility thanks to Stock Connect. At present foreign investors have to invest in Chinese companies via B shares, which are not traded in China. But foreign investors can do more or less whatever they want in Hong Kong. The great promise of Stock Connect, an up-and-coming system connecting Hong Kong and Shanghai-Shenzhen’s stock exchanges, is that it might allow foreigners to buy Chinese A shares.  

The interesting thinking behind this ETF is that as Chinese A shares become available in Hong Kong via Stock Connect, they’ll be put on the MSCI index, and the ETF will invest in them. The index is calculated using China A Stock Connect listings based on the offshore RMB exchange rate (CNH).

China

ICBC Credit Suisse lists new and interesting GEM tracker

Industrial and Commercial Bank of China subsidiary that’s co-owned by Credit Suisse is listing a new fund that tracks Hong Kong small caps via the GEM Index, the ICBC Credit Suisse GEM Index Investment Fund (159958).

This writer had never heard of the GEM index before. According to Wikipedia: “Growth Enterprise Market (GEM) is a board of the Stock Exchange of Hong Kong for growth companies that do not fulfill the requirements of profitability or track record for the main board of the exchange… [it] operates on the philosophy of “buyers beware” and “let the market decide” based on a strong disclosure regime.” 

In other words, it invests in small or micro caps. This appears to be the first such ETF to track this index.

Germany

iShares lists floating and multi factor funds in Germany

iShares is beefing up its German ETF offering, listing two new funds on Xetra. They are:

  • iShares € Floating Rate Bond UCITS ETF (EFRN)
  • iShares Edge MSCI EMU Multifactor UCITS ETF (EDMF)

iShares already has a floating rate ETF listed in the US and London that tracks US-dollar denominated ETFs. EFRN appears to be much the same, only it tracks floating rate notes denominated in euros.

EDMF is similar to the popular iShares Edge MSCI Europe Multifactor UCITS ETF (IFSE), which picks from the biggest and most liquid European companies that fit its factor criteria. Only EDMF tracks companies within the Eurozone, rather than the customs union.

USA

JP Morgan lists another hedge fund style ETF

JP Morgan is listing another new actively managed ETF that gives investors a hedge fund style investment experience, the JPMorgan Long/Short ETF (JPLS).

According to the prospectus, JPLS, will use a long/short strategy to access certain factors. “The strategy involves simultaneously investing in equities (i.e., investing long) that the adviser believes are attractive based on relevant return factors and selling equities (selling short) that the adviser believes are unattractive based on relevant return factors.”

The factors the fund targets are value, momentum, size and quality. The fund can invest in companies anywhere in the world and is unconstrained in the amount of turnover it can use. It is also unconstrained it what types of financial instruments it can invest in.

London

iShares lists more funds over to London

iShares is listing another raft of ETFs into London, which do what they say on the tin. They are:

  • iShares MSCI World Small Cap UCITS ETF (WSML, WLDS)
  • iShares China Government 1-10 yr UCITS ETF (CGOV, SGOV)
  • iShares US Fallen Angels High Yield Corp Bond UCITS ETF (USFL)
  • iShares Thomson Reuters Inclusion and Diversity UCITS ETF (OPEN)

WSML will track small caps from around the world, including emerging markets.

CGOV will track the Citi Chinese Government Bond 1-10 Years Index, about which I cannot find any information at present.

USFL will track fallen angels bonds, in a manner very similar to WING.

OPEN will track and rate companies by their commitment to diversity and including women in the workplace.

*London: more cross-listings*

Today has also experienced another surge in cross-listings of ETFs on the London Stock Exchange. We suspect this has to do with Brexit. For information about which ETFs have been cross-listed please get in touch. 

Canada

Mackenzie Investments lists its funds as ETFs

Toronto-based Mackenzie Investments is listing a suite of new ETFs on the Toronto Stock Exchange, many of which are simply new shares classes of the company’s existing funds. They are:

  • Mackenzie China A-Shares CSI 300 Index ETF        QCH
  • Mackenzie Canadian Large Cap Dividend Fund         QCE
  • Mackenzie Canadian Equity Growth Fund                 QCN
  • Mackenzie US Large Cap Class Series A                   QUU
  • Mackenzie Ivy International Equity Fund                   QDX
  • Mackenzie Canadian Aggregate Bond Index ETF      QBB
  • Mackenzie Canadian Short Term Income Fund          QSB
  • Mackenzie US TIPS Index ETF                                 QTIP
  • Mackenzie US Investment Grade Corporate Bond Index ETF           QUIG
  • Mackenzie US High Yield Bond Index ETF              QHY