Industry Updates

Lyxor to switch benchmark on China A-Shares ETF in response to MSCI changes

Tom Eckett

The Bund skyline at night

Lyxor is set to change the benchmark on its China A-Shares ETF in response to MSCI's decision to increase the weight of onshore Chinese stocks across its broader emerging market and China benchmarks earlier this month.

The £40.1m Lyxor Fortune SG MSCI China A UCITS ETF (CNAA) will track the MSCI China A Net Total Return index from 22 March which incorporates mainland stocks that are components of the MSCI China All Shares index and are traded on Shanghai or Shenzhen Hong-Kong Stock Connect.

CNAA will continue replicating the MSCI China A Onshore Net Total Return index until the end of trading that day.

MSCI's changes to its wider benchmark will take place over a three-step inclusion process starting this May and ending in November that will see China A large-cap jumping from 5% to 20% of its benchmarks. If fully included, China A-Shares will account for around 16% of the MSCI Emerging Markets index.

The firm said in a statement: "We believe this is the best reflection of how the future China A-Shares building block will look post November.

"Our chosen index will account for all of the inclusions immediately, so it should benefit from the expected inflows into A-Shares in the lead up to November."

Furthermore, CNAA will be renamed the Lyxor Hwabao WP MSCI China A UCITS ETF to represent the new name of the sub-delegated asset manager Hwabao WP Asset Management, formerly known as Fortune SG Asset Management.

Launched in August 2014, CNAA is run by portfolio manager Raphaël Dieterlen and has a total expense ratio (TER) of 0.65%.

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