Winnersrationale

As investors hunt for yield in the equity market in view of low bond returns, the ability to capture upside with cost efficiency has led ETFs to become a fixture in Asian private clients’ portfolios across different themes. As a household name in ETFs, iShares by BlackRock gathered record inflows from private banks across Asia despite volatility in markets such as Hong Kong and mainland China.
Thanks to a diversified shelf of ETFs — spanning from index trackers to themes of automation and sustainability — iShares achieved tremendous success in 2021, recording over US$2.5 billion in private banking inflows, with 75% generated from the equity line of business.

Among the index trackers, the iShares Hang Seng TECH ETF crossed the US$1 billion AUM mark in May 2021, eight months after the fund’s launch. By the end of September, the fund was onboarded by over 20 private banks, whose clients are contributing 40% of the overall AUM.

Despite China tech equities being hit by waves of regulatory clampdowns over the past 12 months, iShares has seen investors in Asia buying on the dips with US$489 million inflows into its Hang Seng TECH ETF throughout the 2Q21 and 3Q21 in order to top up their underweight positions in the Chinese tech companies that are expected to be the primary drivers of the country’s economic growth.

The strong inflows into the fund demonstrated iShares’ leading position in the market as it became the biggest Hang Seng Tech ETF in only a matter of months after launch, trumping its competitors with lower fees and a smaller tracking error.

iShares is Asian Private Banker’s Best Fund Provider – Equity ETF.

Winners rationale

CSOP was the first out of the gates to launch a fund to benefit from the creation of the Hang Seng TECH Index. The index, launched on 27 July 2020 aims to capture high-growth opportunities in technology themes — such as cloud computing, digital, e-commerce, fintech and internet — by tracking the 30 largest technology companies listed in Hong Kong.CSOP’s world-first Hang Seng Tech ETF (3033) raised over HK$3 billion (US$387 million) on the first day of listing, breaking Hong Kong’s first-day turnover record for an exchange traded fund.

CSOP managed to raise part of that record number from top-tier private banks in Asia, with support from their cash trading and structured products that used the ETF as an underlying component. It also witnessed a pick-up in investments from private bank investors, discretionary portfolio managers and family offices in the region, that used CSOP’s Leveraged & Inverse ETF as part of their portfolio construction. That helped swell inflows by US$300 million as at 31 August 2020, on a 12-month basis.

CSOP has been a pioneer in quickly adapting products that cater to a pressing need in the investments industry. In 2020, CSOP launched the CSI 500 ETF and gold futures leveraged product, in addition to the Hang Seng Tech ETF and China A-shares L&I (leveraged and inverse) product.

Not the one to rest on its laurels, CSOP was also the first Chinese offshore asset manager to list an ETF on SGX. The ETF, that invests in China onshore government bonds, was the largest pure Chinese government bond ETF globally with more than US$700 million in initial investments. More than one third of the AUM came from HNWs from private bank and family office platforms, demonstrating the ability of the asset manager to cater to a gap in the market. In this case, near zero or negative yields in global government bonds prompted a flood of investments in Chinese government paper, notwithstanding the mainland China economy’s ability to rebound from the COVID-19 pandemic.

That experience came in handy for CSOP, as it was chosen to be one of the first four issuers to participate in the Hong Kong and Shenzhen cross-listing programme. The master ETF of 3167.HK listed in Hong Kong was highly welcomed by domestic investors in China, setting a record of more than RMB 900 million (US$139.4 million) during the initial offering period.

CSOP has a unique internal system that calculates the net asset value of the fund in real-time, monitoring the real-time holdings in comparison to the index, capturing timely disclosures of underlying stocks, so that its investment team can react to abnormal movements. This has been achieved by linking the in-house portfolio management system to the Bloomberg Asset and Investment Manager to guarantee an error-free execution. The internally developed portfolio attribution system allows portfolio managers to understand performance attributions and react accordingly to achieve an optimal tracking performance against the benchmark. Understandably, CSOP ETFs have been awarded the Best Tracking Error by Bloomberg for five successive years.

This has been well appreciated by clients. Within 2020, CSOP on-boarded more than 120 new clients globally including brokers, banks, private banks, insurance, endowments, pension funds, asset management, family offices, international hedge funds and sovereign wealth funds from Thailand, Taiwan, Singapore, Korea, Japan, Europe, America and mainland China.

The Hong Kong asset manager leads the multi-asset segment, partly on account of the success of its flagship product. Combining initiative with an ability to consistently address market needs in an efficient manner, CSOP has been selected as Asian Private Banker’s Best Fund Provider – Equity ETF.