EIP Widens Asia-Pac ETF Distribution With CLSA Deal

September 02, 2014

Enhanced Investment Product (EIP) Limited has sold nearly 50 percent of its exchange traded fund business to Asia’s oldest brokerage and investment house, CLSA Hong Kong Holdings Ltd (CLSA), in a deal that will help broaden EIP’s distribution of ETFs.

EIP will relinquish 49 percent of its ‘XIE Shares’ ETF business to CLSA, but its actively managed funds, index funds and non-listed beta solutions are excluded from the deal and will continue to be managed by the alpha management team under a new company named EIP Alpha Limited.

The deal is anticipated to help boost EIP’s distribution network across Asia, most notably in China, as a result of CLSA’s broad broker network via CITIC Securities.

Tobias Bland EIP’s chief executive said EIP will be one of the most significant ETF providers in Asia. “CLSA is the perfect partner to achieve this goal. Its exceptional distribution network, particularly in China with CITIC Securities, along with CLSA’s award winning research capabilities, will allow us to offer our investors varied products and efficient vehicles to express their investment views.”

Jonathan Slone, CLSA Chairman and CEO added: “As the Hong Kong and China markets continue to liberalize, investing into one of the leading ETF issuers in Asia enables CLSA to diversify its product offering and provide a mechanism for investors to capture the value of CLSA’s index-linked research through thematic ETFs.”

EIP’s ETF platform was launched in February 2012 following regulatory approval to launch synthetic ETFs on the Hong Kong Exchange.

The Securities and Futures Commission previously took a heavy handed approach with swap-backed ETFs in Hong Kong, which – at the time of launching the ETFs – could have meant EIP were required to hold greater collateral than European-based rivals and would therefore have been in a more difficult position to compete on pricing.

However, Bland said at the time he was confident of the launch and that there was no single preferred investment strategy for all situations.

According to data from ETFGI the Asia Pacific Exchange Traded Product (ETP) market had assets under management of roughly $187 (€142) billion at the end of the first half of the year.

A note from EIP also shows that from the beginning of the year to August 2014, Asia Pacific domiciled ETPs took in net new assets of $29 billion with Japan, Hong Kong and China leading the region in AUM market share at 46.6 percent, 20.2 percent and 13.7 percent respectively.

Existing XIE Shares ETF retail investors will experience no change in service as a result of the deal and the same management team will be managing the ETF portfolios. EIP will however welcome Xen Gladstone, CLSA global head of sales, and Nigel Beattie CLSA managing director, new business and product development, to its board of directors.

 

 

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