China Post Global has launched what it claims to be the first smart beta China A-Shares ETF in Europe.
The Market Access Stoxx China A Minimum Variance Index Ucits ETF applies a minimum variance approach to China’s onshore stock market.
The vehicle will track the Stoxx China A 900 Minimum Variance Unconstrained AM index, composed of 135 stocks listed on the Shanghai and Shenzhen stock exchanges based on their volatility and their trading volume. The maximum weight for each position is capped at 8%.
With a TER of 0.65%, the ETF is based on full physical replication.
“China has for some time been the primary engine of global growth and there is significant investor demand for China exposure, though in many cases allocations are being held back by concerns about higher volatility,” says Danny Dolan, managing director of China Post Global (UK).
“The minimum variance approach works to address these volatility concerns while maintaining sufficient liquidity, aiming to give investors access to higher risk-adjusted returns in the medium- and long term,” he added.
The smart beta ETF will be listed on the London Stock Exchange, SIX Swiss Exchange, Deutsche Börse and China Europe International Exchange, and registered in the UK, Austria, Germany, Italy, Luxembourg, Netherlands and Switzerland.