Asset manager VanEck has listed an ETF it describes as Europe’s first ETF designed to provide access to Chinese companies from the new economy, taking ESG criteria into account.
The VanEck Vectors New China ESG UCITS ETF is listed on London Stock Exchange and Xetra Deutsche Börse and the ETF is also available at CEINEX, a platform of Deutsche Börse for China-related financial products in Europe.
The firm writes that China is one of the world’s fastest growing major economies and has a rapidly growing middle class. Currently, it includes around 400 million people, which is already larger than the total population of the United States. With growth, GDP per capita is also rising significantly, which is bringing about a change in the consumption patterns of China’s middle class.
“It’s a new kind of consumer that is behind China’s amazing growth,” says Martijn Rozemuller, CEO at VanEck Europe. “They spend their money on innovative technologies, healthcare services, pharmaceuticals, consumer and luxury goods. China’s economy continues to develop and companies in the country are adapting to the new consumer realities. Chinese companies that are part of the new economy are likely to outpace the country’s overall growth.”
With the new VanEck Vectors New China ESG UCITS ETF, investors can invest in a targeted selection of the strongest companies in this dynamic new economy, filtered according to ESG criteria, and profit from the comprehensive transformation of the Chinese economy. But increased spending on consumer and consumer staples is not just impacting manufacturers.
“Today, e-commerce platforms also play a very big role in China,” Rozemuller says. “People in China are fundamentally very digital-savvy; globally, China’s consumers rank first in online spending. China’s online retail market is larger than the next largest 10 markets combined. At the same time, China’s population is aging much faster than that of many other countries, according to the World Health Organization; by 2035, one in five Chinese could be 65 and older. As a result, overall spending on healthcare in China, for example on pharmaceuticals or telemedicine services, is growing – companies in the healthcare sector will benefit from this.”
The new ETF tracks the MarketGrader New China ESG Index, which includes only companies from four sectors: non-consumer staples, consumer staples, healthcare and technology. The index selects the 100 companies with the most solid fundamentals and continuously evaluates them based on four factors: growth, valuation, profitability and cash flow.
In addition, companies must exceed the regional median ESG score, which is regularly determined by OWL Analytics using the OWL Analytics Consensus ESG Score. It covers over 25,000 companies worldwide and publishes monthly metrics aggregated from hundreds of independent ESG data sources. In addition to ratings and rankings of all companies in its covered universe, OWL ESG quantifies corporate behavior against thirty core metrics, including 12 KPIs, related to ESG factors. The VanEck Vectors New China ESG UCITS ETF is accumulating and has a total expense ratio (TER) of 0.60 per cent.