CSOP Asset Management has expanded its suite of thematic strategies with the launch of a new ETF providing exposure to innovative Chinese healthcare companies.
CSOP has launched a new ETF in Hong Kong targeting innovative Chinese healthcare companies.
The CSOP China Healthcare Disruption Index ETF (3174 HK) has been listed on the Stock Exchange of Hong Kong and is available to trade in Hong Kong dollars.
It has come to market with HK$100 million (approx. $13m) in assets.
CSOP cites data from the World Health Center that show that China’s healthcare sector, already the second-largest in the world, is expanding rapidly, exhibiting a compound annual growth rate of 17% over the past five years and on track to reach $2.4 trillion by 2030.
According to CSOP, the onset of Covid-19, China’s aging population, and government support through the 13th Five-Year Plan will all serve as further tailwinds for the healthcare sector, particularly in innovative sub-sectors like telemedicine and biotechnology.
Methodology
The fund tracks the Solactive China Healthcare Disruption Index which selects its constituents from a universe of Hong Kong-listed stocks with market capitalizations above HK$3 billion ($380m) and average daily trading volumes greater than $1m.
To be included in the index, a firm must be headquartered in mainland China, Hong Kong, or Taiwan and must be assigned to one of the healthcare industries, as defined by FactSet’s Revere Business Industry Classification System (RBICS), which has been determined to demonstrate high levels of innovation. Examples of eligible healthcare industries include biotechnology, medical specialties, biopharmaceuticals, healthcare equipment, internet pharmacies, and healthcare technology.
The index selects the 35 largest eligible securities and weights them by market capitalization subject to an 8% cap. Reconstitution and rebalancing occurs on a quarterly basis, although a fast-track rule allows for the rapid inclusion of eligible IPOs that would rank within the largest 20 index constituents.
As of 19 July, notable index positions include Wuxi AppTec (8.9%), Wuxi Biologics (8.4%), JD Health International (8.2%), BeiGene (7.7%), and Alibaba Health Information Technologies (6.8%).
The ETF has a management fee of 0.99% and expected ongoing charges over a year of 1.50%.
‘Forward-thinking approach to thematic investment’
Melody He, Managing Director, Head of Business Development and Product Strategy & Solutions, said: “We are delighted to list the CSOP China Healthcare Disruption Index ETF (3174 HK) on HKEX and feel honoured to continue our partnership with Solactive to present the investment opportunities of China’s fast-growing healthcare sector to global investors. We look forward to bringing more thematic ETFs with Solactive for our investors in the future.”
Timo Pfeiffer, Chief Markets officer at Solactive, added: “Undeniably, China has become one of the world’s most productive innovation hubs, and the healthcare sector, which is, at the moment, considered with the utmost importance, is no exemption. With the new CSOP China Healthcare Disruption Index ETF, CSOP demonstrates its forward-thinking approach to thematic investment, exemplifying again its commitment to add value to investor’s portfolios.”