Chinese asset management firm Bosera Asset Management Co Ltd has reportedly raised $200 million for what it has claimed to be the country's first sustainable development-focused exchange-traded fund (ETF). The Shenzhen-based firm revealed that the ETF has managed to attract strong interest from domestic institutional investors and investors from abroad.
The new ETF, called the Bosera CSI Sustainable Development 100 ETF, reportedly raised the funds after the company wrapped up its global marketing last week. According to Bosera, the ETF received major backing from "two or three" overseas hedge funds. It apparently also received investments from a firm in Argentina.
Due to the interest, Bosera stated that it is currently considering the possibility of launching an offshore feeder fund to meet the demand from foreign investors. The company's deputy head and portfolio manager, Steve Wang, did not immediately disclose the names of the investors that backed the new ETF.
Wang did disclose that the company plans to list the new sustainability-focused ETF on the Shanghai Stock Exchange next month. Although, the exact date of its listing has yet to be determined. The ETF will be added to Bosera's wider ETF portfolio, which currently has a combined value of $11.7 billion.
The Bosera CSI Sustainable Development 100 ETF tracks the CSI Sustainable Development 100 index, which is being run by the China Alliance of Social Value Investing (CASVI). Together with Bosera, the two companies have developed a new assessment model that looks at the sustainability factor of different Chinese companies.
While the new assessment model still ranks companies based on their profitability, it also considers other factors such as a company's societal contributions. This includes factors such as its ability to enforce employee rights, value to customers, its environmental impact, and its ability to provide a safe operating environment for its employees.
Based on the data it has so far gathered, CASVI revealed that some of the top-ranking A-share companies on its list include the China State Construction Engineering Corp, China Yangtze Power, the Agricultural Bank of China, and Hangzhou Hikvision Digital Tech. All of the companies listed are currently part of the CSI 300 index.
Wang explained that investors would stand to benefit from betting on such an ETF as the underlying portfolio companies do provide better transparency and therefore present less risk. Wang also clarified that the fees for its new ETF will be lower than actively managed funds. Actively managed funds typically have a 1.5 percent fee, while the new ETF will have a lower 0.5 percent management fee.
