Russell Indexes partners with Shanghai bourse on ETFs

US-based Russell Investments has made its indexes available in mainland China exclusively through the Shanghai Stock Exchange (SSE), as the basis for exchange-traded funds (ETFs).

The two entities signed a memorandum of understanding on Monday to that effect and will automatically renew the agreement after each annual term.

Russell will launch its first ETF on the SSE "very soon", says Kevin Lohman, director of global index sales at Russell Investments. The firm does not have a specific AUM target for any potential launches on the SSE, he tells AsianInvestor.

There are not yet any ETFs in Asia tracking Russell's indexes. But the firm does have an index fund client in Taiwan, Polaris, which is the biggest ETF provider in that market and the fifth largest ETF provider in Asia-Pacific ex-Japan by AUM, as of the third quarter of 2009.

"Russell Indexes can provide a wide variety of indexes based on the needs of our Chinese ETF partner," adds Lohman. "This ranges from China or other country-specific indexes, to sector or industry indexes, regional indexes, style indexes, or a combination of these segments." Russell can also produce custom indexes based on specific client needs, he says.

"Exchange-traded products based on Russell indexes will provide Chinese investors with the additional flexibility for managing risk or gaining exposure to a broad segment of the international market," says Lohman. "The partnership will offer Chinese investors this broad global access on the largest local exchange."

Russell's indexes form the basis for ETFs representing assets under management of $65 billion globally, putting the firm in fourth place as an ETF index provider by AUM. The iShares Russell 2000 ETF is the third most traded ETF in the US.

As of December 31, Russell had $4 trillion benchmarked to its indexes globally and $176 billion in assets under management.