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Lyxor switches China ETF to ESG index

The ETF will be the largest ESG fund listed on the Singapore exchange with $328m of AUM.
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The Lyxor MSCI China ESG Leaders Extra (DR) Ucits ETF is the renamed version of the asset manager’s China equity ETF after the manager changed its reference index to the MSCI China Select ESG Rating Trend Leaders Net Total Return Index.

“This index switch meets the ever-increasing interest coming from Asian investors in ESG exposures on the China equity market. This ETF now also qualifies as an Excluded Investment Product (EIP), making it more accessible to retail investors,” said Christopher Friese, head of Lyxor ETF Asia-Pacific at Societe Generale.

According to the Singapore Exchange, an EIP has terms that are generally understood by retail investors who have a basic understanding of financial instruments with standardised terms and no unusual or complicated features.

The new index tracked by the Lyxor ETF aims to select companies with a robust ESG profile and targets a coverage of 50% of underlying MSCI China Index, according to Lyxor.

Since its inception in September 2006, the Lyxor China Enterprise (HSCEI) Ucits ETF had been tracking the Hang Seng China Enterprises Index.

Before the switch of the index, the fund has posted a -7.74% cumulative return over three years, versus the benchmark average of -4.08%. The sector average return was at 58.8% over the same period, according to FE Fundinfo.

Singapore market going strong

Driven by strong institutional and retail inflows over the last quarter, the AUM in the Singapore ETF market has reached S$10bn ($7.42bn) in September, up 49% year over year.

As of the end of September, the number of investors engaged in ETF trading has increased 43% year over year, while trading activities are up 30% quarter-over-quarter.

This is due to new ETF listings offering exposure into fixed income and equities continued to attract strong investors interest, said Lyxor.

The Singaporean market has also benefitted from the introduction of dual-currency trading in some foreign funds. On 30 June, the SPDR Gold Shares ETF allowed investors to trade in Singapore dollars for the first time since its listing in 2006.

Part of the Bonhill Group.