ETF providers are continually seeking out innovative strategies to offer investors compelling overseas investment opportunities.
That theme has never been more prevalent than with the Chinese markets, where restrictions on foreign investment can limit growth.
To solve this problem, Deutsche Asset & Wealth Management has created a suite of ETFs that have direct exposure to publicly traded China A-shares that were previously only available to mainland residents.
The db X-trackers Harvest CSI 300 China A-Shares Fund (NYSE: ASHR) was the first ETF of its kind to invest directly in the 300 largest and most liquid A-share stocks.
Since its November 2013 inception, this ETF has accumulated more than $205 million in assets, amid resurgence in stocks of emerging market nations. That immediate growth demonstrates a desire by global investors to access these coveted markets through a diversified investment vehicle.
More recently, ASHR gained approval by the Comisión Calificadora de Riesgo for distribution among Chilean pension funds. The ability for this ETF to be registered in Chile and trade in local time is an advantage for pension managers in this South American country.
Fiona Bassett, Head of Deutsche Asset & Wealth Management’s Passive Business in the Americas, was recently quoted as saying that ASHR's approval by the Chilean pension commission "is further validation of the interest in the Fund’s innovative exposure, and we believe it will complement our current product suite in Chile”.
This regulatory approval may soon lead to an additional influx of new money for ASHR, as it seeks to compete with larger and more established ETFs in this space. The iShares China Large-Cap ETF (NYSE: FXI) has $4.8 billion in total assets but does not have the ability to invest in the A-share market.
If successful, this new relationship could also pave the way for admittance of the db X-trackers Harvest CSI 500 China-A Shares Small Cap (NYSE: ASHS) into international pension funds as well. ASHS tracks 500 small cap A-share companies and may be seen as a complimentary ETF in order to access the total investable universe in China.
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