Hong Kong-based asset management firm Enhanced Investment Products (EIP) has sold 49 per cent of its exchange-traded funds (ETF) business to CLSA Hong Kong Holdings Limited.
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.
The Asia Pacific exchange-traded product (ETP) market continues to be robust with assets under management of approximately USD198 billion. This is in line with growth in the global ETP market with assets at approximately USD2.63 trillion. For year-to-date August 2014, Asia Pacific domiciled ETPs took in net new assets of USD29 billion with Japan, Hong Kong and China leading the region in AUM market share at 46.6 per cent, 20.2 per cent and 13.7 per cent respectively.
CLSA’s acquisition of EIP’s “XIE Shares” ETF platform allows the firm instant access to this growing market.
The XIE Shares ETFs launched in 2012. 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.
New 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.
Tobias Bland, chief executive 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 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, says: “As the Hong Kong and 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.