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CSOP AM’s CGB ETF becomes largest in Singapore

The inflows were driven mostly from institutions in Asia, as well as the US, according to the firm.

Just after a month of its launch, CSOP Asset Management’s first exchange-traded fund in Singapore has become the largest Singapore-domiciled ETF in the market, amassing assets of around $1bn, according to a statement from the firm.

During its initial offering period, the product already gathered $676m in assets, which made it the world’s largest pure Chinese government bond ETF, FSA previously reported. At the time, the ETF had several cornerstone investors, including sovereign wealth funds, endowments, banks, family offices and asset managers.

After being listed on the exchange, the ETF had additional inflows of around $340m, according to a Hong Kong-based CSOP AM spokesman of the firm.

“Most of the inflows were driven by large institutions as part of their long-term asset allocation,” he said.

The spokesman noted that the inflows came from other markets besides Singapore, including Japan, Taiwan, Australia, Korea, Southeast Asia and the US, as they are seeking ways of gaining onshore exposure.

“Investors are spurred by FTSE Russell’s decision to include Chinese government bonds (CGBs) into its World Government Bond Index,” he said.

Global investors remain to be underinvested in the asset class, Melody He, managing director at CSOP AM, told FSA previously. Although foreign institutions now hold around $400bn of Chinese bonds, this only accounts below 3% of the whole onshore market.

CSOP AM’s product is also the first ETF in Singapore to utilise the variable capital company (VCC) framework, which is a new corporate structure that can be used for investment funds that should provide fund managers with greater operational flexibility and cost savings.

“The VCC structure is an efficient and cost-effective structure for ETFs, which is with more flexibility and transparency. We believe that VCC structure will be quite common going forward given its operational and tax-efficient features,” He said.

Part of the Mark Allen Group.