Acquisition marks first time that a Hong Kong asset manager has acquired a European ETF range ; Transaction provides China Post Global with foothold in European market; New entity will launch the first European smart beta ETFs to invest in Chinese securities…
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China Post Global, the international asset management arm of China Post & Capital Fund Management Company Limited, has acquired the European Exchange Traded Funds of Royal Bank of Scotland. It is the first time that a Hong Kong asset manager has acquired a European UCITS ETF umbrella and its investment management team.
China Post Fund is the domestic Chinese asset management business co-owned by China Post Group, one of China’s largest state-owned enterprises, Capital Securities (the brokerage arm of Capital Group, another large Chinese state-owned enterprise) and Sumitomo Mitsui Banking Corporation. China Post Fund was also recognized as the first listed fund management company in China following its listing on the National Equities Exchange & Quotations (NEEQ) last year.
The acquisition enables China Post Global to become the promoter and global distributor for the Market Access ETFs, formerly RBS’s ETFs listed in Frankfurt and Zurich. These invest in commodities, Emerging Market and Frontier Market equities and have assets under management in excess of EUR360 million. All have lengthy track records; ranging from five to 10 years.
The Market Access ETFs will be seeded with additional capital to make them more attractive to institutional investors. While the annual management fees on the existing ETFs will stay at between 50 and 70 basis points, improved terms have been secured on the underlying derivative contracts that will cut the overall cost to investors by up to 40bps per annum. China Post Global has already secured multiple new Authorised Participants and market makers to increase the ETFs’ liquidity.
The acquisition marks the first step in China Post Global’s strategy to become a gateway between China and the rest of the world, providing mutual access in both directions for investors. Accordingly, the existing 10 ETFs will be cross-listed in Hong Kong. The aim going forwards is to grow the existing ETFs and to launch innovative new funds for both regions. The company plans to launch later this year the first ever smart beta ETFs in Europe investing in Chinese securities. China Post Global will also target extensive distribution in mainland China.
Danny Dolan, Managing Director of China Post Global (UK), commented: “This acquisition demonstrates China Post Global’s long term commitment to the European region. Our aim is to differentiate ourselves through innovation. For example, while ETFs giving exposure to China and smart beta strategies already exist, no-one in Europe has yet combined the two. Other differentiators for us include our access quotas to mainland Chinese securities, the strength of our parent companies and their distribution networks, and the strong financial engineering background of our team, which will help with product construction.”