New Frontier For Chinese ETFs

Another milestone was reached in the ETF industry Thursday as CSOP FTSE China A50 ETF AFTY became the first ETF to be listed in the U.S. by a Chinese asset management company.

Similar A-share ETFs have been listed in the U.S. before, but most have been partnerships between U.S. or Europe-based ETF issuers and Chinese asset managers.

CSOP

Chinese asset management company CSOP was founded in 2008 and was the first offshore asset manager set up by a regulated asset management company in China, according to CSOP's website.

China A-shares products are becoming more popular, as an increasing number of U.S. investors are jumping at the opportunity to own physical Chinese A-shares.

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Competitive Peers

CSOP will be competing with the Deutsche X-Trackers Harvest CSI 300 China A-Shares ETF ASHR, now with more than $1 billion in assets; KraneShares Bosera MSCI China A-Shares ETF (KraneShares Trust) KBA and the Market Vectors China AMC A-Share ETF (Market Vectors ETF Trust) PEK.

AFTY, however, is not joining the U.S listed A-shares race empty-handed. CSOP's listing took in the largest initial capital investment among all U.S.-listed equity ETFs since 2007. The initial investment totaled $237 million in assets equating to 13.96 million shares.

A Closer Look At AFTY

In terms of the strategy and makeup of the ETF, AFTY comprises 50 of the largest companies in the China A-shares market across nine sectors. Financials make up 68 percent of the portfolio, followed by consumer staples at five percent.

The top individual holdings include:

• Ping An Insurance PIAIF at 9 percent
• Citic Securities CIIHF making up 6.1 percent
• China Merchants Bank CIHHF at 5.7 percent

The ETF began trading on March 12 at $17.72 and has an expense ratio of 0.99 percent.