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Source launches first Chinese A-shares ETF

Source launches first Chinese A-shares ETF

Source ETFs has launched the first London-listed exchange-traded fund (ETF) to track Chinese A shares.

The ETF was listed this morning on London Stock Exchange, in conjunction with Hong Kong-based asset manager CSOP.

The CSOP Source FTSE China A50 UCITS ETF is the first Ucits-compliant mirror to invest directly under the Renminbi Qualified Foreign Institutional Investor (RQFII) quota scheme.

Source overtook Deutsche Asset & Wealth Management, which announced the launch of a similar ETF this week. Deutsche's product is scheduled to list on 16 January on the LSE.

In November, Deutsche launched an equivalent ETF in New York, which has already attracted around £125 million in assets.

Seeded with initial assets of RMB 1.42 billion (US$230 million) Source’s physical fund seeks to deliver the performance of the FTSE China A50 Index which comprises the largest quoted Chinese companies.

Among the largest constituents of the index are Ping An Insurance, China Vanke and Gree Electric Appliances.

Source’s ETF carries a 0.99% management fee charge for retail investors with an anticipated total expense ratio of up to 1.11%.

Hong Kong-based CSOP is currently the largest RQFII manager of A shares globally and has been granted a quota specifically for the CSOP Source FTSE China A50 UCITS ETF.

‘This ETF represents a milestone for European investors,’ said Source CEO Ted Hood. ‘It allows all investors – not just large institutions with their own investment quotas – to invest directly in one of the world’s most important equity markets.

‘CSOP’s knowledge of the Chinese market and their experience managing RFQII ETFs allow us to offer an efficient, well-structured product.’

‘We are delighted to be partnering with Source to create a European ETF,’ added Chen Ding, CEO of CSOP. ‘There has been high demand for our HongKong-listed ETF and we expect similarly strong interest from Europe.'

CSOP’s existing FTSE China A50 ETF (2822 HK), listed in Hong Kong, is the largest and most actively traded RQFII ETF, with assets of RMB 21 billion.

The RQFII programme, which allows Chinese financial firms to establish renminbi-denominated funds in Hong Kong for investment in the mainland, was approved by the China Securities Regulatory Commission (CSRC) in December 2011.

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