Daily ETF Watch: CSOP Debuts 1st Fund

Eight funds are set to roll out today. One is a fund targeting China’s A-shares market, and the others are part of iShares’ target-date-maturity corporate bond ETF lineup.

CSOP’s First Fund

The CSOP FTSE China A50 ETF (AFTY) is Hong Kong-based CSOP Asset Management’s first fund to roll out on a U.S. exchange. The ETF tracks an index that covers the 50 largest “A-shares” companies whose shares are listed on mainland China stock exchanges in either Shanghai or Shenzhen, according to the prospectus. The fund was seeded with a hefty $237 million in assets on its first day of trading, immediately landing among the top five China funds in terms of assets.

The regulatory paperwork also notes that the fund will use a representative sampling approach. That means that while the fund won’t necessarily hold the exact 50 securities in the index, it will hold securities that have similar fundamental, investment and liquidity characteristics, the filing said.

CSOP is a renminbi-qualified foreign institutional investor (RQFII), which means it can invest in the A-shares market, according to a quota granted by the Chinese regulatory authorities. CSOP’s website says it is the largest RQFII asset manager. It remains somewhat difficult for investors to invest in China’s A-shares market, but loosening restrictions in recent years has piqued interest outside of China.

Although a newcomer to the U.S. market, CSOP is not new to ETFs. The firm also manages a Hong Kong-listed ETF by the same name as the ETF it is launching in the U.S.; the older fund is traded in both Hong Kong dollars and renminbi. It was launched in August 2012.

AFTY has an expense ratio of 0.99 percent, or $99 for each $10,000 invested, and is listed on NYSE Arca.

iShares Fills Out iBonds Family
iShares is updating its target-date-maturity bond fund lineup with this latest launch, making it even more competitive.

In the iBonds lineup, each diversified portfolio of corporate credits, like an individual bond, matures and shuts down, allowing investors to treat the securities like individual bonds. That opens the door to strategies like bond laddering or barbells.

The leader in this burgeoning pocket of the bond ETF world remains Guggenheim Investments, which began marketing its BulletShares lineup a number of years ago. Guggenheim has been quite methodical in its introduction of its new BulletShares target-date-maturity bond ETF lineup.

iShares’ lineup, on the other hand, has been a little less clear. The funds, at the outset, didn’t provide exposure to consecutive years, and in some cases there are funds that mature within the same year but in different months.

Filling In Gaps

The launches fill in some of the gaps in the coverage provided by the series and make it easier for investors to use them in laddering strategies.

Currently, there are 17 of the iShares iBonds funds falling into four separate suites: “iBonds Mar Corporate ETFs” (which mature in March of the designated year), “iBonds Dec Corporate ETFs” (which mature in December of the designated year), “iBonds Mar Corporate ex-Financials ETFs” and “iBonds AMT-Free Muni Bond ETFs.”

The seven new funds are the latest members of the iBonds Dec Corporate ETFs family, which already covers bonds maturing in 2016, 2018 and 2020. The launching funds will fill in the gaps between those years and extend the suite’s coverage to 2025.

The BulletShares family of corporate bond ETFs already covers every year from 2015 to 2024. However, they also charge more than twice as many basis points with respect to their expense ratios. The BulletShares each come with a fee of 0.24 percent, while the iShares funds charge only 0.10 percent.

The newest batch of iShares funds includes the following:

• iShares iBonds Dec 2017 Corporate ETF (IBDJ)
• iShares iBonds Dec 2019 Corporate ETF (IBDK)
• Shares iBonds Dec 2021 Corporate ETF (IBDM)
• iShares iBonds Dec 2022 Corporate ETF (IBDN)
• iShares iBonds Dec 2023 Corporate ETF (IBDO)
• iShares iBonds Dec 2024 Corporate ETF (IBDP)
• iShares iBonds Dec 2025 Corporate ETF (IBDQ)