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LSE welcomes 150th fixed income ETF listing… Value Partners launches its first RQFII China A-share fund…

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Hong Kong-based asset manager Value Partners announced this week that it was launching its first Renminbi Qualified Foreign Institutional Investor (RQFII) productValue Partners China A-Share Select Fund

Authorised by Hong Kong’s Securities and Futures Commission for public offering, the fund, which launched on 16 October, offers investors a direct and broad exposure to the Mainland’s stock market.
 
Value Partners was granted its first batch of RQFII quota of RMB800 million in October 2013, which will be applied to the fund.  In April 2014, it obtained a new round of quota of RMB500 million. 
 
With the upcoming “Shanghai-Hong Kong Stock Connect” program, China’s A-share market will be opened up and attract foreign inflow, acting as a positive catalyst to bolster undervalued stocks. 
 
The Value Partners China A-Share Select Fund is an actively managed A-share equity fund that has a flexible mandate to invest in Shanghai- and Shenzhen-listed companies. The fund seeks to capture a wealth of A-share opportunities including investments in quality A-share companies with strong profitability and attractive valuation, small and medium-sized enterprises, as well as high-dividend stocks that may benefit from the narrowing of valuation gap between A and H shares.
 
“China’s A-share market has experienced a multi-year slump that has dragged down valuations to record low levels.  Attractive valuation has offered investors good buying opportunities in quality companies,” said Alan Wang, Investment Director and Head of Research (Shanghai) of Value Partners.  “We remain positive on the Chinese stock markets on the back of continuous financial and state-owned enterprise (“SOE”) reforms, stable earnings growth, and further integration with global capital markets.”
 
Timothy TSE, Chief Executive Officer of Value Partners added: “Value Partners is among the earliest investors that have pioneered in the A-share market and we run one of the largest on-the-ground investment teams in Asia.  As China opens up its capital market further, our experience and capabilities will help investors identify more value stock investment opportunities. The upcoming launch of the “Shanghai-Hong Kong Stock Connect” program is set to unveil more A-share investment opportunities which we aim to capture.” 
 
There’s been a lot of activity in the ETF markets this week.
 
Firstly, London Stock Exchange ushered in the 150th fixed income ETF to its markets: the SPDR Thomson Reuters Global Convertible Bond UCITS ETF. Launched by State Street Global Advisors, the product gives investors an opportunity to gain exposure to global convertible bonds.
 
London Stock Exchange is the largest European fixed income ETF market with the highest on-exchange turnover (EUR30.3bn year-to-date) for fixed income ETFs. London now offers 150 fixed income ETFs, with over 85 per cent of the leading European fixed income ETFs, by value traded, listed on London Stock Exchange.
 
Lida Eslami, Exchange Traded Product specialist, London Stock Exchange, commented: “This listing marks a significant milestone for London Stock Exchange and is a testament to London’s continuing status as the pre-eminent European destination for issuers and investors. We’re delighted to mark our 150th fixed income listing with the arrival of the SPDR Thomson Reuters Global Convertible Bond UCITS ETF on our markets, which further highlights London’s ability to offer the widest diversity of products and investor access to global markets.”
 
Secondly, in another fixed income ETF launch, Nasdaq announced that Vident Financial, LLC had listed the Vident Core US Bond Strategy ETF (‘VBND’) on The Nasdaq Stock Market. VBND began trading on Nasdaq on 16 October, 2014.
 
"Fixed income is a critical asset class in our client's portfolios and we set out to address some of the risk challenges they are facing in the core of their fixed income portfolio," said Nick Stonestreet, Chief Executive Officer of Vident Financial. "Our clients were proactive with their concern about concentrated risks in the fixed income markets and asked us to develop a transparent, systematic strategy to replace the uncertainty around certain star-manager led funds."

VBND is a fixed income strategy that seeks to track the performance of the Vident Core U.S. Bond Strategy Index (Bloomberg Symbol VBNDX). This rules-based strategy index is designed to try to diversify some of the risks (credit, inflation, counter-party and star-manager) associated with fixed income strategies through the use of time-tested economic and investment principles.

The fund aims to improve corporate bond exposure by including companies Vident believes to have stronger leadership, governance and creditworthiness characteristics.

"Vident Financial will benefit from Nasdaq's highly efficient, transparent listing program for exchange-traded products and the liquidity spectrum we represent," added Walt Smith, Vice President, Head of US Equities at Nasdaq. "We are thrilled to launch VBND with our partners at Vident Financial and appreciate their confidence in choosing the Nasdaq Stock Market to list and trade ETFs.”
 
Finally, Standard Life Investments has appointed two members of its specialist inflation team to help manage the Ignis Absolute Return Government Bond reported Citywire Global this week. This follows the departure of three of the fund’s four-person team. Significantly, with EUR4.93bn in AuM the fund is one of Ignis’ largest. The departures include Russ Oxley, Paul Shanta and Adam Purzitsky. Stuart Thomson remains the last member of that original team. Stepping in to fill the gap are Jonathan Gibbs, head of real returns, and Adam Skerry. As Citywire Global reported, Chris Fellingham, the CIO of Ignis, who were acquired by SLI in March, has also been appointed to manage the fund.

Keith Skeoch, Chief Executive Officer of SLI, was quoted as saying: “Our robust and repeatable investment process, combined with the intellectual capital that underpins our investment capabilities, gives us confidence that we will continue to produce strong fund performance and deliver outcome oriented client solutions in the future.”

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