Deutsche and Harvest first into European market with RQFII fund

Hong-Kong-1The first exchange-traded fund (ETF) set up under a scheme in China that awards renminbi investment quotas to Hong Kong asset managers is to be launched in Europe.

China’s Harvest Global Investments and Germany’s Deutsche Asset & Wealth Management are to launch the first RQFII – or renminbi qualified institutional investor - ETF which will track China’s A-shares stock market.

Under Hong Kong regulations, the RQFII scheme allows Hong Kong-based asset managers to market funds denominated in renminbi to foreign investors. The RQFII programme is seen as a means of expanding China’s asset management industry.

Regulatory approval from Luxembourg, where the fund is to be domiciled, comes less than two weeks after Harvest and Deutsche launched the first RQFII ETF in the US, which attracted $100 million (€74.5 million) of initial investment.

“With our expertise to manage the largest China A-shares physical ETF in the world, we are excited to expand the RQFII ETFs to the US and Europe as well,” says Peng Wah Choy, chief executive officer of Harvest.

As the fund listing is yet to be confirmed, Peng declines to name the ETF. However, last week it listed the DB-X Trackers Harvest CSI 300 ETF on the New York Stock Exchange. Peng says for now those interested can look at this ETF and “draw comparisons”.

Peng also says Harvest developed the 300 index with CSI in 2005, and it is “our first love", adding that a wider range for investors will be developed over time.

Earlier this year, Choy told Funds Global Asia, Funds Europe’s sister publication, that Harvest Global Investments should become a global brand and that he had plans to co-brand funds it sub-advises for Deutsche Bank.

Deutsche says it manages the largest non-RQFII China A-Shares ETF listed in Europe, which has $900 million of assets under management, providing indirect access to China A-shares.

Marco Montanari, head of passive asset management, Asia Pacific, at Deutsche, says Hong Kong-domiciled RQFII products cannot be publicly offered to US and European investors, but those will be “instrumental for the opening of the China market”.

Montanari adds that this is the reason why Deutsche aims to become the leading ETF manager, providing to global investors an efficient access to China.

©2013 funds europe