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XIE Shares launches leveraged Chimerica ETF

Hong Kong-based EIP launched its first leveraged ETF providing 2X exposure to Chinese companies listed in the US.

Enhanced Investment Products launched XIE Shares Chimerica FTSE N Share Daily (2X) Leveraged Product in Hong Kong today.  The boutique ETF provider’s first leveraged product is also the market’s first ETF offering leveraged exposure to Chinese companies, according to HKEx.

“The 21 constituents that comprise this product are securities that investors know well since they are concentrated in the growing internet and technology industries,” said Tobias Bland, CEO of EIP, in a statement.

The new product is a leveraged counterpart of the XIE Shares Chimerica ETF, launched in April 2015.  Both ETFs provide exposure to American Depositary Receipts (ADRs) of Chinese giants such as Alibaba, Baidu or JD.com, which are not included in broad China stock indices.   

While XIE Shares Chimerica ETF invests directly in ADRs to provide physical replication of the index, the new leveraged product uses swaps to implement synthetic replication of its FTSE N Share Daily 2X Leveraged index.  The constituents and their weightings in both indices are the same, according to EIP.

The FTSE Chimerica index significantly outperformed its benchmark index since it launched in April 2015.

 

With the launch, EIP adds to the fast-growing number of leveraged and inverse ETFs listed on HKEx since Securities and Futures Commission approved them in early 2016. 

Samsung Asset Management was first out of the gate, with four products launched in June 2016. The launch of the XIE Shares leveraged ETF brings the total number of such listings to 13, offered by five providers.  Altogether they held HK$530m in AUM on 6 February, according to HKEx data.

 

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Top 10 constituents of the FTSE Chimerica index as of 12 January 2017: 

 

Source: EIP 

 

Part of Mark Allen.