CSOP’s China bond ETF scoops more than $1bn in assets

CSOP Asset Management’s first exchange traded fund in Singapore has already become the largest ETF domiciled in the city-state, underscoring strong interest from global investors wanting access to China's onshore debt markets.

The firm’s ICBC CSOP FTSE Chinese Government Bond Index ETF, which is benchmarked against the FTSE Chinese Government Bond Index, was listed on the Singapore Exchange on September 21.

CSOP AM, a subsidiary of Shenzhen-based China Southern Asset Management, has now announced that the ETF, the first Singapore-listed ETF investing directly in China’s onshore bond market, had attracted more than $1bn in assets.

Following an initial investment of $676m, which made it the largest Chinese pure government bond ETF globally, the ETF has seen “continuous capital inflow” since listing last month, according to CSOP AM.

This article was previously published by Ignites Asia, a title owned by the FT Group.

The size of the ETF means it is larger than SPDR’s Singapore-listed Straits Times index ETF, which has some $984m in assets, the ABF Singapore Bond Index Fund with about $748m, and the Nikko AM SGD Investment Grade Corporate Bond ETF with $419m, according to Bloomberg data cited by CSOP AM.

Apart from being CSOP AM’s first ETF in Singapore, the product is also the first ETF to use the country’s Variable Capital Companies structure, which CSOP AM said should allow for greater efficiencies in terms of operations and trading settlement.

CSOP AM noted the rapid rise in the ETF’s asset pool had been partly driven by China’s stable economic recovery, the appreciation of the renminbi and FTSE Russell’s plans to include Chinese government bonds in the FTSE World Government Bond Index in October 2021.

According to the ETF provider, institutional investors from abroad were “highly interested” in gaining exposure to Chinese government debt.

CSOP AM said Chinese government bonds were set to attract “continuous inflows from global investors” amid the internationalisation of the renminbi.

The company added that the ETF, which has an annual management fee of 0.25 per cent, captured the opportunities of a rise in demand for renminbi-denominated assets.

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Melody He, Hong Kong-based head of sales and product strategy for CSOP AM, told Ignites Asia that the ETF had attracted investment from clients across the Asia-Pacific region — including Japan, Taiwan, South Korea, Australia and south-east Asia — as well as from US investors.

She added that “while most of the inflows are driven by large institutions as part of their long-term asset allocation, we also see good adoption from family offices and high-net-worth investors”.

CSOP AM opened its first overseas office in Singapore a year ago as a first step in accessing clientele outside of Greater China.

*Ignites Asia is a news service published by FT Specialist for professionals working in the asset management industry. It covers everything from new product launches to regulations and industry trends. Trials and subscriptions are available at ignitesasia.com.