Deutsche, Harvest ready London RQFII ETF

Deutsche Asset & Wealth Management and Harvest Global Investments continue to break new ground with their range of exchange-traded funds under China's renminbi qualified foreign institutional investor (RQFII) scheme.

The next step will be the London listing of the first Ucits RQFII to track the CSI 300 index, say sources, with January 16 the target date. The product was approved last month by Luxembourg's financial regulator.

DeAWM and Harvest Global, the Hong Kong arm of Beijing-based Harvest Fund Management, aim to list the fund on other European bourses as well as the London Stock Exchange.

Harvest won approval from China's State Administration of Foreign Exchange this month to re-allocate Rmb2 billion ($329.3 million) to the Ucits product from the Rmb5 billion quota it won initially for its MSCI China A index ETF.

DeAWM and Harvest launched the new fund in New York last month, as first reported by AsianInvestor, making it the first RQFII ETF in the US and raising $108 million during the IPO. Reports indicate that this makes it the biggest launch among all equity ETFs in the US market this year.

London will be the first European exchange for listing the ETF, and other bourses in the region are likely to follow, says Choy Peng Wah, CEO of Harvest Global. He declined to confirm the launch date.

Marco Montanari, Asia-Pacific head of passive management at DeAWM, had in an earlier interview told Asianinvestor that the two firms plan to list the ETF on exchanges across Europe. DeAWM already has ETFs listed in France, Germany, Italy, Switzerland and the UK.

In Europe, ETF investors are much more likely to be institutions than retail buyers than in the US, where both retail and institutional demand for ETFs are strong. Nonetheless, says Choy, DeAWM and Harvest will try to tap into the European retail market by cooperating with local dealers.

The target date for the new product, January 16 – considered auspicious in the Chinese calendar for listing and trading – takes into consideration the Christmas and Western new year holidays, which are viewed as low season for fund sales, says a source. But the timing is subject to change, stress those familiar with the matter. 

The two firms are said to be in talks with authorised participants and market-makers in Europe with a view to targeting both institutional and retail investors.