BMO Financial Group has become the first Canadian bank to launch exchange-traded funds (ETFs) in Hong Kong – introducing them through BMO Global Asset Management.
Since its inception, BMO's ETF business has grown to 62 funds. Delivering high income levels based on sustainable underlying portfolio yields has been one of the primary focuses of the platform.
Under the leadership of managing director Amit Prakash, the firm's Hong Kong ETF team, backed by the stability, size and global reach of BMO Financial Group, has been focused on developing ETF strategies for Hong Kong by drawing on BMO Global Asset Management's existing expertise in dividend based smart beta strategies and fixed income ETF products.
"BMO Global Asset Management is a pioneer in the ETF market and has a reputation for responding to investor needs," said Kevin Gopaul, chief investment officer and global head of ETFs, BMO Global Asset Management. "Building on our strong track record and leveraging our experienced team in Canada, we're excited to be able to introduce our first three ETFs for Hong Kong investors that are designed specifically to address key investor needs in the region."
BMO Global Asset Management is introducing three ETFs in Hong Kong: BMO Asia USD Investment Grade Bond ETF, BMO Hong Kong Banks ETF and BMO Asia High Dividend ETF. It is anticipated that these will list on the Main Board of The Stock Exchange of Hong Kong Limited (SEHK) on 13 November 2014.
BMO Asia USD Investment Grade Bond ETF is the first ETF in Hong Kong that offers Asia USD bond exposure to over 450 Asian bonds across 150 issuers, giving investors an investment vehicle that aims to provide regular income with a potential for long term capital preservation. It invests in high credit quality sovereign and corporate investment grade bonds denominated in US dollars that tracks the performance of the Barclays Asia USD Investment Grade Bond Index.
BMO Hong Kong Banks ETF is the first ETF in Hong Kong to invest in Hong Kong listed bank stocks with a potential for attractive dividend yield, to be paid out twice a year. It tracks the NASDAQ Hong Kong Banks Index through a full replication strategy. This ETF will provide investors access to 10 to 20 banks in one single trade, as well as exposure to a key economic sector that is a proxy for the growth of the Greater China economies.
BMO Asia High Dividend ETF seeks to track the NASDAQ Asia ex Japan Dividend Achievers Index, which consists of more than 150 stocks that offer sustainable, attractive dividends in Asia ex Japan. It is one of the very few high dividend yield ETFs that provides a broad equity exposure and generates regular income with potential for long-term capital appreciation.
"In a low interest rate environment, the demand for income and growth may not be met by fixed income investments alone," says Prakash. "Dividend-paying stocks offer a competitive yield and growth potential. Investors can capitalise on the rapid development of Asian capital markets and tap the growth story in the region. As one of the top ten largest fixed income ETF providers in the world, we understand the need for income. Both the bond and equity ETFs we are launching today will pay regular dividends, allowing investors to earn income while benefiting from Asia's continued growth.
"We hold a positive outlook for the region's economy and capital markets and more specifically, the financial services sector. We have seen a shift from companies using bank loans to financing expansion through capital market activity. Our ETFs allow investors to participate in these underlying trends through products which offer long-term capital preservation and appreciation potential.”
BMO Hong Kong Bank ETF and BMO Asia High Dividend ETF are the first ETFs that track NASDAQ indices in Hong Kong. BMO Asia USD Investment Grade Bond ETF is also the first ETFs in Hong Kong that tracks the Barclays Asia USD Investment Grade Bond Index.
"Both NASDAQ and Barclays have significant expertise and knowledge in the areas where our products are focused. Barclays' track record in fixed income is arguably unrivalled, and NASDAQ has developed a strong reputation for custom-designed indices,” says Prakash. “This gives us the confidence we can work well together and continue to develop innovative and responsible ETFs to Hong Kong investors."
