China Post Global launches AT1 CoCos ETF
After WisdomTree and Invesco Powershares launch ETFs on additional tier 1 contingent convertible instruments in recent weeks, it is China Post Global’s turn to launch its passive strategy on the segment.
The Chinese manager has launched the Market Access Markit iBoxx EUR Contingent Convertible Liquid Developed Market AT1 Index Ucits ETF.
It aims to provide diversified exposure to euro-denominated AT1 contingent convertible (CoCo) bonds and consists of an EUR-based ETF tracking a European bank CoCo bond index (the Markit iBoxx EUR Contingent Convertible Liquid Developed Market AT1 index).
The index picks and weights AT1 CoCo bonds based on their type, credit rating, liquidity, investability and time to maturity, currently holding 40 bonds from 19 different issuers. The ETF uses full physical replication with a total expense ratio of 0.48%.
China Post Global’s ETF will be listed on Euronext Amsterdam, the London Stock Exchange and SIX Swiss Exchange, and registered in the UK, Austria, Germany, Italy, Luxembourg, Netherlands and Switzerland.
“This is an exciting new ETF for which we’re seeing considerable demand from institutional investors. Investors appreciate its transparency and the lack of FX risk, as it’s a euro-denominated ETF providing exposure to a purely euro index. The ETF tracks the same iBoxx AT1 index used in the institutional swap market, and investors appreciate the additional liquidity this entails,” said Danny Dolan, managing director of China Post Global (UK).