ETFs In Europe: New Firm Takes Over RBS Funds With Eye To China

April 06, 2016

Last month, China Post Global (U.K) acquired the European exchange traded funds of Royal Bank of Scotland, marking the first time that a Hong Kong asset manager has acquired a European UCITS ETF umbrella and its investment management team. The firm, co-owned by Hong Kong-based China Post Group, one of China’s largest state-owned enterprises, will manage and be the promoter and global distributor for the Market Access ETFs, formerly RBS’ ETFs listed in Frankfurt and Zurich. ETF.com spoke with China Post Global Managing Director Danny Dolan about the change and the firm’s goal of being the gateway between China and the rest of the world, providing mutual access in both directions for investors.

ETF.com: Tells us about China Post Global.

Dan Dolan: China Post Global is a new London-based investment manager to funds of various types and domiciles. Our parent company, China Post Group in Hong Kong, is a very large state-owned enterprise in China, and it decided a couple of years ago to set up a domestic asset management business within mainland China.

The China Post Fund has about 25 live funds that they manage, and about 20 further managed accounts. And last year, China Post Fund decided to create an international asset management business to complement its existing domestic asset management business, China Post Global.

Because China Post Fund is a traditional long-only manager, an active manager, basically stock picker and bond selector, it recognized that it wanted some financial engineering expertise in its international business, because part of its ambition was smart-beta strategies and systematic strategies and ETFs.

Post Global was created as a two-way gateway into and out of China, a way for non-Chinese investors to invest in on-shore Chinese assets. On the other hand, it also seeks to be a gateway for Chinese investors to invest in overseas markets. Those are the two main practices of China Post Global.

By acquiring the Market Access ETF range, China Post Global acquired the team that has managed them. So I and my team have come from RBS, together with the ETF range. We bring many years of ETF structuring and management experience, both to continue managing the existing range, and also to launch new ETFs and continue to grow the Market Access ETF range.

ETF.com: So China Post Global has come in and bought the Market Access ETFs from Royal Bank of Scotland …

Dolan: It didn't buy them, it acquired them. We have taken over the mandates and roles that RBS used to fulfill in relation to these ETFs, which were investment manager, sponsor and global distributor. RBS resigned from those roles when it decided it wanted to exit the ETF industry. A number of other parties applied to the board of the fund, to the Market Access board to take over those roles. China Post Global was chosen for those.

As part of our plans to increase assets under management both from Europe and from China, and indeed from Hong Kong, we plan to cross-list the existing ETFs, not replicating them, but actually listing them on a third exchange.

So we have Frankfurt and Zurich at the moment, and we will, in the short term, rather than further down the road, explore adding a third exchange located in Hong Kong to make it more convenient for Asian investors.

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