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Hermes and CSOP team up to give investors access to China’s “sunshine” managers… UBS Global Asset Management launches 4 ETFs on LSE…

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UBS Global Asset Management this week announced the listing of four ETFs on the London Stock Exchange. The funds track the Dow Jones Global Select Dividend and MSCI Emerging Markets SRI indices as well as the MSCI USA index.

The UBS DJ Global Select Dividend UCITS ETF is a new product offering exposure to the top dividend paying companies globally. The underlying index is weighted by dividend yield with the constituent stocks selected on fundamental strength relative to peers, subject to dividend strength and liquidity.
 
UBS was the first asset manager to offer ETF exposure to the MSCI Socially Responsible index series in Europe and the newly launched UBS MSCI Emerging Markets Socially Responsible UCITS ETF continues in this vein. The ETF will offer exposure to the MSCI Emerging Markets SRI 5% Issuer Capped Total Return Net, which itself was only established in March 2014. In keeping with having its products available on a broad range of exchanges, the UBS MSCI USA ETF will also be listing on the LSE. The fund provides exposure to large and mid-cap US equities and is available in both GBP and USD trading currency. The ETF is already listed on SIX and has assets under management of USD1.2bn.
 
Both the UBS DJ Global Select Dividend UCITS ETF and UBS MSCI Emerging Markets Socially Responsible UCITs ETF will apply for UK reporting fund status and perform annual reporting for UK investors. The two MSCI USA ETFs have previously been granted UK reporting fund status.
 
Andrew Walsh, Head of ETFs, UK & Ireland at UBS Global Asset Management, commented: “These new listings will enable our ETFs to reach an even broader investor base. We are constantly responding to our clients’ needs and believe that the listing of our two new ETFs, DJ Global Select Dividend UCITS and MSCI Emerging Markets Socially Responsible UCITS ETF, will provide them with products which meet their varied investment requirements.”
 
 
Citigroup Global Markets Limited (“Citi”) have joined forces with Bank of China (Hong Kong) Asset Management Limited to launch the BOCHK RMB High Yield Bond Fund. It is the first Renminbi high yield bond fund to be registered by BOCHK in Luxembourg. The fund will invest in RMB-denominated debt securities and those that are hedged to the RMB or have other exposure to the currency.
 
BOCHK AM launched its first RMB high yield bond fund in August 2011. Over the past three years it has generated annualized returns of 15.2 per cent, on average. Citi’s Markets and Securities Services division worked with BOCHK to launch the new UCITS fund. Both will act as the fund’s distributors, BOCHK will be the appointed investment manager while Citibank International plc (Luxembourg) will act as the fund’s administrator and custodian.
 
The fund aims to build on the growing importance of Luxembourg as a key investment centre for RMB. There are already USD42bn (RMB262bn) of assets held in Luxembourg-domiciled funds linked to RMB. Dr. Au King Lun, CEO of BOCHK AM was quoted as saying: “The fund launch is a major milestone for BOCHK AM.  Our strategic collaboration with Citi highlights the growing importance of RMB bonds as a new asset class for investors globally.”
 
Eric Personne, EMEA Head of Citi’s Multi-Asset Group added: “BOCHK AM’s insights, delivered via the UCITS format with associated benefits and safeguards, represents a timely and exciting investment proposal for a wide range of global investors.”
 
A partnership between CSOP Asset Management and Hermes Investment Management is set to give investors access to China’s ‘sunshine” managers. “Sunshine” funds are privately run trust funds which can best be thought of as prototype hedge funds. They are called “sunshine” funds because the Chinese regulator is uncomfortable with the connotations attached to “hedge fund”.

As reported by Efinancial News, both CSOP and Hermes have invested seed money in the CSOP Hermes China A-Share Fund, an Irish-domiciled UCITS fund. It launched this month and has raised USD80mn. It will invest in Chinese shares that are listed on the Shanghai Stock Exchange and the Shenzhen Stock Exchange.

CSOP will take control of managing the fund but will avail of three Shanghai-based sunshine fund managers to make investment decisions. These managers include: Rosefinch Investment, Top Fund Investment Management and Huili Asset Management. As such, it marks the first time China’s sunshine managers have worked with a foreign fund manager and could well open the floodgates to more arrangements going forward.

Richard Williams, Hermes’ co-head of Asia, was quoted as saying: “We wanted access to these guys [sunshine managers] who are the stars of the industry. They are viewed as the premium access to the China market.” Jack Wang, deputy chief marketing officer at CSOP, said: “We are delighted to be partnering with Hermes to create unique access to some of China’s fastest growing and most highly respected sunshine managers.”

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