Enhanced Investment Products, a Hong Kong-based asset management firm, has sold 49% of its Exchange Traded Funds (ETF) business, to CLSA Hong Kong Holdings.
The Enhanced Investment Products group’s 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.
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The Asia Pacific Exchange Traded Product (ETP) market continues to be robust with assets under management of approximately US$198 billion. This is in line with growth in the global ETP market with assets at approximately US$2.63 trillion.
For year-to-date August 2014, Asia Pacific domiciled ETPs took in net new assets of US$29 billion with Japan, Hong Kong and mainland China leading the region in AUM market share at 46.6%, 20.2% and 13.7% respectively.
CLSA’s strategic acquisition of EIP’s "XIE Shares" ETF platform allows the firm instant access to this growing market.
The XIE Shares ETFs launched in 2012. Outperforming many of its peers, XIE Shares Trust I* represents a low cost, transparent and efficient way to gain exposure into Emerging Asian markets. Under the new partnership, EIP can widen its distribution network with the involvement of CLSA and the broker network of CLSA’s parent, CITIC Securities.
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By GlobalDataNew ETF products are expected to be rolled out under the XIE Shares brand with EIP to launch thematic and sector driven ETFs using CLSA’s proprietary benchmarks in the future.
XIE Shares ETFs have adopted a synthetic replication approach to allow cost effective and simple access to Emerging Asian markets and EIP expects to expand its ETF portfolio to also include physical ETFs in due course. The firm’s philosophy is to use the best structure for each ETP and will issue both physical and synthetic ETPs depending on the benchmark.
Overall APAC regional ETF growth is estimated at 15-20% annually. Mutual recognition for ETFs between Hong Kong and mainland China will further increase this growth in assets and number of products in the region, particularly for Hong Kong and mainland China. With XIE Shares ETFs already listed on the Hong Kong Stock Exchange, this allows the collaboration between the two investment houses to get a head start and take full advantage of the Mutual Recognition Agreement with immediate effect.
Tobias Bland, CEO at EIP, says: "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 mainland 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 comments: "As the Hong Kong and mainland 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."
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 MD, New Business and Product Development, to its board of directors.
