CICC launches HKD money market ETF in Hong Kong

Dec 1st, 2020 | By | Category: Fixed Income

The Hong Kong subsidiary of China International Capital Corporation (CICC) has launched a new actively managed money market ETF in Hong Kong aimed at liquidity-focused investors seeking a cash management yield.

CICC launches HKD money market ETF in Hong Kong

The fund offers a cash management tool for Hong Kong dollar investors.

The CICC HKD Money Market ETF (3071 HK) has listed on the Stock Exchange of Hong Kong in Hong Kong dollars and comes with a management fee of 0.25%.

The ETF invests in short-term deposits and high-quality money market instruments issued by governments, quasi-governments, international organizations, and financial institutions globally.

Eligible holdings primarily include fixed and floating-rate debt securities, commercial papers, certificates of deposits, and commercial bills. The fund may also allocate up to 15% of its portfolio to mortgage-backed and asset-backed securities.

Limits of 30% will be placed on all securities issued in emerging markets as well as those denominated in currencies other than the Hong Kong dollar. Exposure to any single issuer will be capped at 10%.

Portfolio holdings must be rated investment grade, and the ETF will target an average portfolio maturity of 60 days or less.

In selecting individual securities, the portfolio manager will assess the yield of the instrument while taking into consideration factors such as currency, credit, and counterparty risk, liquidity, trading costs, the timing of execution, and the relative attractiveness of individual securities and issuers in the market.

The fund complements CICC’s existing money market ETF – the ICBC CICC USD Money Market ETF (USD: 3011 HK; HKD: 9011 HK) – which focuses on US dollar securities. This fund, which is sub-advised by ICBC Global Asset Management, became Hong Kong’s first actively managed ETF when it debuted in June 2019. It currently houses $550m in assets under management and also has a management fee of 0.25%.

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