Caixin Insight has announced it has entered into a strategic cooperation with commodity trading fund Gresham Investment Management in order to create a series of Chinese commodity indices.
China, as both the biggest producer and consumer of many commodities worldwide, has been attracting growing attention from global investors. But as of yet, the development of domestic commodity indices has been somewhat lacking.
Gao Erji, executive president of Caixin Insight.
China-focused research company Caixin aims to leverage its knowledge of China’s financial markets, along with Gresham’s experience in global commodity investment management, to fill this gap. The indices will aim to be fully investable, paving the way for product development based on the indices including potential ETFs.
“Caixin Insight perceives itself as the builder of China’s financial infrastructure in a new economic era,” said Gao Erji, executive president of Caixin Insight. “This strategic cooperation between our two companies will mutually enhance each other while filling the gaps in the traded index market for Chinese commodity futures. We aim to match the quality of the widely accepted Bloomberg Commodity Index, and create China’s wind vane for the global commodity market and offer investors the best investment strategies.”
“We are honoured to cooperate with Caixin Insight,” said Alex Gansch, head of global sales and business development of Gresham Investment Management & CEO of Gresham Asia. “We have about 30 years of profound experience upon global commodity futures investment management, but the Chinese commodity market still has great potential yet to be explored.”
The China Commodity Index Series will include the Chinese Commodity Index, the Chinese Commodity Index with Factor-Based Interim Rebalancing, the Chinese Commodity Long-Bias Index, and the Chinese Commodity Long-Short Index.
The Chinese Commodity Index is intended to be a broad benchmark for the Chinese commodity futures market. Employing a systematic, disciplined approach to portfolio construction and commodity selection, the index emphasizes Chinese-only production of each commodity to ensure the economic relevance of those commodities to the Chinese economy. It also takes the liquidity of contracts into consideration to accommodate large-scale investment and to minimize the impact of market inefficiencies that can arise in less liquid markets.
Gansch added: “Our valuable experience with quantitative models and strategies will be applied upon developing the China Commodity Index, subsequently pushing the index into second and even third generation index by international standards, which in turn provides an excess annualized rate of return and lower volatility for investors.”