Daily ETF Watch: HK Firm Plans China Funds

Hong Kong-based CSOP Asset Management has filed for two more funds that will launch in the U.S. The CSOP MSCI China A International Hedged ETF and the CSOP CSI 300 Smart ETF will both capitalize on popular trends in the ETF space, while leveraging CSOP’s China investment expertise as the largest renminbi qualified institutional investor quota holder in the world.

Earlier this year, the firm rolled out the CSOP FTSE China A50 ETF (AFTY), which offers direct exposure to China’s A-shares market. The fund has only gathered about $12.4 million in assets under management since its March launch, but the A-shares space is pretty hot right now, and CSOP’s local ties and quota status could give it an edge.

The CSOP MSCI China A International Hedged ETF could be a double whammy, combining A-shares exposure with currency hedging. The fund will hedge away the fluctuations of the renminbi against the U.S. dollar. Currently, there are no currency-hedged China ETFs, so the CSOP fund may have the edge of being the first to market.

A similar unhedged fund, the KraneShares Bosera MSCI China A Share ETF (KBA | F-64), tracks the same index, which means investors could use the two as complementary products if they do not want to hedge away all currency risk.

Meanwhile, the CSOP CSI 300 Smart ETF will track the same companies as the plain-vanilla CSI 300 Smart Index, which tracks the large-cap A-shares space. However, when a company has shares listed on both the Hong Kong stock market and China’s A-shares market, it will opt for the most undervalued of the two securities, as determined by CSI’s formula. The formula will be applied monthly, with the index switching between A-shares and H-shares as needed.

The filing did not include tickers or expense ratios, but it did indicate that the funds would list on the NYSE Arca.