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Magazine Issues » February 2014

FUND LAUNCHES: China, corporates, currencies

Hong KongThe first instalment of our new regular feature profiles recent launches that grabbed our attention, and looks at one fund a year later.

Too many China equity funds are targeted at the old economy, says Swiss & Global Asset Management – mature, slow-growing and often state-owned companies. The MSCI China index is over-represented with these firms, being composed of 70% firms in the telecoms, energy and financial sector.

The JB China Evolution Fund, however, aims to capture potential growth of the “new economy” – new, nimble and potentially quick-growing firms in the technology, healthcare, environmental protection and the broad consumer space.

The fund will invest in 30 to 50 companies in these sectors, seeking to profit as China moves to become a consumer-driven market, a trend that could see it become the second biggest consumer market in the world by 2015.

Fund company: Swiss & Global Asset Management
Fund name: Julius Baer Multistock – China Evolution Fund
Launch date: 02/12/2013
Domicile: Luxembourg
Legal structure: SICAV under Luxembourg law / Ucits IV
Base currency: USD
Fund manager: Jian Shi Cortesi

When an exchange-traded fund (ETF) is listed and traded on multiple national exchanges in Europe, it settles in the national central securities depositary of the exchange where the trade was executed. Wouldn’t it be simpler to have a single, international settlement venue?

That’s what BlackRock has done with its iShares Euro Stoxx 50 ex-Financials Ucits ETF, which it says is the first ETF in Europe to come to market with an international security structure. Thanks to a partnership with Euroclear, the ETF will settle in a single, pan-European venue.

If other firms adopt the same process, the post-trade process for ETFs in Europe could become cheaper and more efficient, helping the European ETF industry to grow.

BlackRock’s fund, issued through its ETF subsidiary, iShares, gives investors access to European equities while stripping out the financial sector, for instance, banks and insurance firms.Fund company: BlackRock

Fund name: iShares Euro Stoxx 50 ex-Financials Ucits ETF
Launch date:12/12/2013
Domicile: Ireland
Legal structure: Ucits
Base currency: EUR
Fund manager: N/A

Large investors have been able to buy shares in mainland Chinese companies for some time thanks to the Renminbi Qualified Foreign Institutional Investor (RQFII) quota scheme.

Now, small investors in Europe have a convenient way to gain exposure, thanks to the launch of the first exchange-traded fund (ETF) to offer direct access to the Chinese A shares market.

Hong Kong-based CSOP Asset Management teamed up with Source to offer the fund, listed on the London Stock Exchange, which is available to institutional and retail investors.

FL boxSource chief executive Ted Hood remarks that the ETF was a milestone for European investors. ”It allows all investors – not just large institutions with their own investment quotas – to invest directly in one of the world’s most important equity markets.”

Fund company: CSOP Asset Management and Source Investment Management
Fund name: CSOP Source FTSE China A50 Ucits ETF
Launch date: 9/01/2014
Domicile: Ireland
Legal structure: Ucits
Base currency: RMB
Fund manager: N/A

Corporate bond funds have proliferated in recent years. To distinguish itself from rivals, Schroders is aiming to take a thematic approach with its new Euro Credit Conviction product. The European and UK credit teams at the company will invest the fund’s assets according to investment themes developed and tested.

Patrick Vogel, lead manager on the fund, says his team can generate outperformance because they are allowed to invest in high-yielding bonds.

“While traditional core euro credit strategies may be constrained to owning low-yielding bonds, which dilute the best ideas and, therefore, the returns that these products could deliver, this fund gives us the flexibility to focus our strategy on the investment opportunities which offer the best potential for returns.”

Fund company: Schroders
Fund name: Schroder ISF EURO Credit Conviction
Launch date: 18/12/2013
Domicile: Luxembourg
Legal structure: Ucits
Base currency: EUR
Fund manager: Patrick Vogel

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