Following the group’s initiative to organise its activities around four core business lines, La Française appoints Pierre Schoeffler as “Senior Global Asset Allocation Advisor”, a role that will cover all asset classes managed by the group. The Group’s strength and originality lies in its wide-range of expertise, as well as its coherent approach to asset allocation.
Xavier Lépine, Chairman of the Board of La Française said, “Pierre’s experience, advice and quantitative tools will help reinforce our strategic overview in terms of allocation through a quantitative approach to the various asset classes. Our strength lies in the diversity and originality of our solutions and approaches, and our ambition is to optimise their combination by drawing on Pierre’s vision as a portfolio strategist. In the current low rate environment, our aim is to help our clients manage this challenge by providing them with a comprehensive service and a 360 degree view of Asset Allocation by including all asset classes from real estate to bonds, and equities to hedge funds”.
Pierre Schoeffler is Chairman of S&Partners and a Senior Advisor at IEIF.
Pierre Schoeffler is an engineer with degrees from Ecole Polytechnique and the Ecole Nationale de la Météorologie. He began his career as a fluid mechanics researcher before being appointed as a portfolio strategist at Crédit Commercial de France. He was then appointed head of Asset-Liability Management at the bank, and became head of the Economic and Equity Research Department. In 1990, he left the CCF to open the Paris branch of the Swedish bank Svenska Handelsbanken and launch its investment banking business in France. In 2004, he left Svenska Handelsbanken to found S&Partners, a financial and alternative (including real estate) asset allocation strategy consulting company.
The European Fund and Asset Management Association (EFAMA) has hired Gabriela Diezhandino, the former Head of Public Affairs for Insurance Europe, to head its newly created Public Policy Department.
The new departmentwill work closely alongside EFAMA’s other two specialist divisions – Economics andResearch, directed by Bernard Delbecque and Regulatory Policy, directed by Vincent Ingham. Its primary focus will be on engaging in a constructive dialogue with policy and decision makers to promote EFAMA’s legislative agenda and the views of its members.
This development reflects EFAMA’s commitment to proactive engagement with new and existing political stakeholders through transparent dialogue, and to ensure the industry continues to be represented effectively on the European and international political stage.
As Director of Public Policy, Gabriela will take responsibility for strengthening political and public support for EFAMA’s issues and priorities, ensuring that the industry retains a strong voice and positive representation. Gabriela will also be responsible for developing the best possible political framework within which EFAMA’s members operate, working in collaboration with EFAMA’s Director General, the other two Directors, EFAMA members and industry representatives to identify, pinpoint and develop industry priorities and policies.
A 14-year Brussels and EU affairs veteran, Gabriela joins EFAMA from Insurance Europe, where she was Head of Public Affairs for seven years, responsible for devising and implementing the policy communication and engagement strategies, and promoting the policy messages of the association.
Peter De Proft, Director General of EFAMA, said:“We are delighted to welcome Gabriela to the EFAMA team. The creation of this new role is proof positive of our commitment to engaging constructively with law-makers, and is a particularly important and strategic move for us in the context of the newly elected European Commission and Parliament. Moreover, we needed someone with a strong track record on-the-ground in Brussels allied to an in-depth knowledge of the international financial services industry, and the issues that EFAMA will be engaging with.
“We now enter a new and important phase of political engagement and representation for our industry, and Gabriela will play a key role in making sure that we meet our stated intention to provide leadership and play an enhanced collaborative role with legislators and regulators. We have no doubt Gabriela will prove a worthy addition to our team.”
Blackstone has announced that its Board of Directors has approved a plan to spin off its financial and strategic advisory services, restructuring and reorganization advisory services, and its Park Hill fund placement businesses and combine these businesses with PJT Partners, an independent financial advisory firm founded by Paul J. Taubman. The parties expect the transaction to close in 2015.
The new entity will be an independent, publicly traded company, which will be led by Mr. Taubman, 53, as Chairman and Chief Executive Officer. Prior to founding PJT Partners, Mr. Taubman spent 30 years at Morgan Stanley where he served as Co-President of the Institutional Securities Group. Prior to becoming Co-President, he was the Head of Global Investment Banking and Head of its Global Mergers and Acquisitions Department. Since leaving Morgan Stanley, Mr. Taubman, acting independently, has advised corporate clients on some of the largest M&A transactions in recent years and began building an elite team of senior bankers to form PJT Partners.
Upon completion of the spin-off, Blackstone’s current unitholders will initially own approximately 65% of the new entity. Blackstone’s advisory employees will roll their Blackstone units into the new company and, combined with Mr. Taubman and his partners, will initially own approximately 35% of the company. Mr. Taubman will serve as Chairman of the Board of Directors of the new company, which will also include four independent directors.
Stephen A. Schwarzman, Blackstone’s Chairman, CEO and Co-Founder, commenting on the announcement, said, “Blackstone began as an advisory firm nearly 30 years ago. The decision to spin off these businesses is possible because of our success in growing them over the past 30 years. As the largest alternative asset manager in the world, and with our investing areas considerably broader and larger than even a few years ago, we have not been free to aggressively grow our advisory businesses further out of concern for potential conflicts. The separation of our investing and advisory areas will create new growth opportunities for both businesses.”
Mr. Schwarzman continued, “Paul is one of the preeminent investment bankers in the world. He has had an impressive career over three decades as a strategic advisor to Fortune 500 corporations and as a senior Wall Street executive at one of the most respected financial institutions. With this experience, along with his recent success founding and growing an independent financial advisory business and his proven ability to attract top talent to his new firm, I am confident that Paul will help create the best advisory business on the Street. And, while we will truly miss the daily interaction with our advisory colleagues, we look forward to working with them as clients in the future.”
Added Mr. Taubman, “This is a unique opportunity to combine the legacy, scale and scope of a well-established business while capturing the entrepreneurial energy of a new firm to better serve clients. Further, by eliminating the potential conflicts that existed as part of the world’s largest alternative asset manager, these three businesses will now be positioned for significant growth. The new enterprise will include the leading restructuring franchise on the Street, a market-leading fund placement business and a strategically important advisory practice. By combining resources, we have an opportunity to establish a new leader in the advisory space and the premier destination for talent.”
Excluding capital markets revenues attributable to Blackstone’s Financial Advisory segment that will not be part of the transaction, Blackstone’s advisory businesses generated approximately $380 million of revenue for the twelve months ending June 30, 2014.
The transaction is intended to be tax-free to Blackstone and Blackstone’s unitholders. The completion of the transaction is subject to the satisfaction or waiver of certain customary closing conditions, including the effectiveness of a registration statement with the U.S. Securities and Exchange Commission, the receipt by Blackstone of an opinion from its tax counsel as to the tax-free nature of the transaction and certain regulatory approvals. The transaction will not be subject to a vote of Blackstone’s common unitholders. There can be no assurance that the transaction will ultimately be consummated, or, as to its timing in the event the transaction is consummated.
Simpson Thacher & Bartlett LLP is acting as legal counsel to Blackstone in this transaction. Weil, Gotshal & Manges LLP is acting as legal counsel to PJT Partners.
The most challenging projects that have come across my desk this year involve domiciling Emerging and Offshore funds and finding custodian partners in established trustworthy jurisdictions for the funds’ daily operations. It may seem an easy task, but most banks in the US, UK or Ireland will not be as friendly to your Argentina Fixed Income Portfolio or your BVI Small Cap Strategy fund as you’d like.
I started this year working with several Latam investment funds that needed a custodian bank or a clearing agent, tasks that could easily be accomplished within 30 days for any fund structured in the US, UK or Ireland.
But why are custodians so cautious of any jurisdiction not a top 10 global financial hub? It is true that new regulatory changes worldwide are playing a significant role in banks being more selective regarding the clients they want to service. After working directly with banks in the selection and onboarding process, I have learned that in this case the biggest deal breaker is the fear of the unknown. Custody and trust bankers are simply not fully aware of rules, regulations and restrictions that govern funds based in emerging markets or other offshore jurisdictions.
As a fund manager or leader of your investment firm, is your job to educate them. Here are some ice-breaking topics I discuss with custodian banks when onboarding my clients:
Speak the same language
If you are working with a bank outside your jurisdiction, learn the terms, rules and regulations of the jurisdiction that will be doing your safekeeping. Make sure your banker knows what your needs are by identifying them clearly. A custodian account for example, might not have the same functionalities in the UK than it does in the US.
Explain your Investment Strategy and your Growth Potential
Custodial banking is fee-based, so any banker will be more inclined to help you if they can easily determine the number of assets they will be doing custody for, the number of annual trades to be executed and the risks involved within the investment strategy.
Draw a map of your jurisdiction
You should not assume that banks are fully aware of how funds in Uruguay are regulated, or the rules and restrictions faced by broker-dealers in Argentina, or the reporting requirements for a fund in New Zealand. Similar to a business plan, you should explain in writing the rules and regulations that you are supervised under, the similarities between your jurisdiction and a major investment hub, the risks and the rewards of working with a client from your jurisdiction. Most importantly tell the bank why you can be such a great future client and partner.
Show your compliance cards
Make sure to have ready and available to share all the policies and procedures you will be following. Some of the main ones should be: client onboarding policy, AML policy, privacy and reporting policy. You should consider adding policies required in other jurisdictions as this may help you form a new relationship with a bank without affecting your core business strategy.
Form Relationships
Chances are that if you are not managing a minimum of US $50 million in your fund, top-tier Banks will not be fighting over your business. The best relationships I have in banking are with mid-sized banks. These banks are big enough to have recognizable brands and can give you peace of mind about safekeeping, while at the same time are small enough to understand new business means growing together and finding solutions that work for both the client and the bank.
Article by Jonathan Rivas, Managing Parter dcdb Group
Foto: Fondo Monetario Internacional Fotógrafo/Stephen Jaffe - Fotografías de la Reunión Anual del FMI 2007, FMI. ¿Exuberancia irracional 2.0?
The warning signs of new asset bubbles are growing almost by the day. Major institutions, like the International Monetary Fund (IMF) and the Bank for Internatinal Settlement (BIS), as well as individuals who have been right at pointing out bubbles in the past – such as Raghuram Rajan, Governor of the Reserve Bank of India, who correctly anticipated the US real estate bubble – have all started issuing words of warning.
Stefan Hofrichter, CFA, Head of Global Economics & Strategy at Allianz Global Investors, has written a report which was discussed in Allianz GI Investment Forum in Frankfurt last month where he addresses the following issue:
Are we currently witnessing the creation of a new asset bubble or, even worse, a series of asset bubbles fuelled by ultra-easy monetary policy?
The debate should not come as a surprise: US equities were just a few percentage points off their record highs as of the day of writing the report, and other major equity markets have reached all-time highs or multiyear highs over the course of 2014. Bond spreads – be it corporate bonds, emerging market bonds or euro-zone sovereign bonds – are tight by historical standards, albeit not at historical lows. In addition, real estate prices have rebounded forcefully over the past few years in the US, the UK and several euro-area countries. House prices have risen, especially in countries that did not suffer from the burst of a debt-financed real estate bubble at the end of the last decade. This is particularly true for China, other major emerging markets – like Turkey, Brazil and India – and several industrialized markets, notably Hong Kong, Singapore, Canada, Norway, Sweden and Israel. Allianz GI therefore thinks it makes sense to update its research on asset valuation and asset bubbles.
You may access the complete report through this link, though, these are some of the conclusions:
EQUITIES: Based on the cyclically adjusted price-earnings ratio (“CAPE”), also known as “Shiller PE”, global equities look roughly fairly priced and in line with long-term average multiples. European equities, especially in the periphery, even look cheap on this metric. The same holds true for emerging market equities, which are again trading at a discount of around 20 % compared to equities from industrialized countries and are at their lowest valuation reading since 2006 – and at a similar discount as they were in the mid-1980s.
While US equities today are undoubtedly at high multiples compared to their own history, valuations are not in bubble territory and do not preclude a further rise in stock prices. Current valuations are no reason to become ultra- cautious on equities at this juncture, even though current valuations are likely to imply below-average real returns in the coming decade if past experience is a guide for future developments.
BONDS:High-quality sovereign bonds, such as US Treasuries, UK Gilts and German Bunds, are trading significantly below what Allianz GI thinks are nominal trend GDP growth rates, which should be the long-term reference value, based on both economic theory and past experience. Nevertheless, Allianz GI is more relaxed about the valuation of non-German euro-area sovereign bonds relative to Bunds.
Compared to the beginning of the year, though, the valuation assessment today is less favorable for corporate bonds, even though spreads compared to sovereigns are higher today than they were just before the burst of the real estate bubble. This statement is particularly true for high-yield bonds, be it in the US or Europe.
Emerging market bonds issued in hard currencies (benchmark: EMBI+) are reasonably priced, according to Allianz GI’s report. Still, the manager finds that local currency bonds offer better value: first, because of the higher yields compared to sovereign bonds from developed markets; and second, because they also expect additional gains from currencies, which look undervalued in the calculations based on Allianz GI’s long-term valuation approaches.
Top portfolio managers often make the headlines — whether their strategies perform well, or as we’ve seen recently, when they leave their firms. Their departures can be disruptive — whether it’s perception or reality. Fostering “star managers” is a cultural decision — but it’s not one that often works over the long term. The best investment cultures are built on humility, collaboration and mutual respect. There are no stars — only teams, equality and a healthy exchange of ideas.
A strong culture matters a lot — particularly for an investment firm, where people and judgment are your greatest assets. The way teams interact and collaborate to make investment decisions not only impacts how well a strategy performs, but also how the firm does as a whole. Those teams have to function well and create value together if they want to achieve differentiated performance.
Great minds don’t think alike
A collaborative culture doesn’t mean everyone has to think the same way. In fact, diverse views can actually lead to better decisions because they allow you to benefit from multiple perspectives and different analytics to get to a better outcome. But the process of sharing different views must be respectful, not combative. Instead of challenging each other as individuals, it’s important to challenge each other’s ideas. Encouraging team members to offer different views helps a team sift through increasingly large amounts of industry information, filter out the noise and focus on good research. By debating the information together rather than acting on it alone, you can avoid individual biases — which can cause trouble. Ultimately what you get is an environment of constructive challenge aimed at providing better results for clients.
To share different views, however, you need common cultural values. It’s tough to debate investment ideas successfully unless you have a common understanding of the end goal. For instance, if one side believes in a long-term perspective while the other side focuses on short-term market sentiment, that creates a headwind to achieving better outcomes. In fact, research on team building shows that common cultural values form the bedrock for cognitive diversity that leads to differentiated performance.
Culture supports investment beliefs
An investment firm’s beliefs and philosophies should be ingrained in its culture. For example, if you believe that a longer-term investment horizon results in greater opportunity for differentiated performance, your culture must support it. You must reward longer-term performance, tolerate short-term underperformance and follow both an investment process and team orientation that supports these objectives.
Increasing globalization and complexity calls for collaboration and teamwork, not just around the globe but also across capital structures. Consider an equity analyst who can look at company valuations, macroeconomic factors and competitors but typically wouldn’t have a lot of debt experience. Now combine that equity analyst’s view with a fixed-income perspective that looks at more complex credit issues central to the company’s capital structure, such as its financing facilities and debt covenants. Bringing these views across capital structures together provides a much more powerful perspective on a company’s intrinsic value.
Culture also creates a sense of shared responsibility, which is important to good risk management. In a risk-aware culture, shared values and consistent behavior can lead to stronger risk management — yet another case where strong culture benefits the client.
Don’t set it and forget it
It’s not enough to hire talented people. They also need the capacity to work in teams, share information and fit well into the firm’s culture. Infusing cultural values in the management of the firm — each and every day — is just as important as hiring the right people. If you want a collaborative culture to work, you need your employees to live and breathe it so it’s part of the fabric of the firm. Keeping employees connected to the firm’s culture helps them stay invested in the firm. It also reduces staff turnover — which is critical to limiting disruption to portfolio management and reducing hiring and training costs for the firm.
Culture isn’t a skill or a talent. Competitors can’t recreate culture the way they can mimic an investment or business strategy. Firms own their culture, and it’s up to the entire organization to keep it alive.
Article by Michael Roberge, President and Chief Investment Officer, MFS
For many of us in the West, waking up to the aroma of a pot of fresh-brewed coffee is one of life’s little pleasures. In fact, over the course of a year, the average American consumes the equivalent of roughly 9 lbs. (~4.5 kg.) of coffee beans. In Finland, that average is nearly three times higher!
But could this morning ritual catch on throughout Asia? In recent years, China’s annual per capita coffee consumption has been less than a negligible half an ounce (~0.01 kg.). This may help explain a statement I heard recently: “China will never be a coffee drinking nation due to their love of tea.” But is this view really correct?
Japan, which has the highest rate of coffee consumption in the region, was introduced to the brew at the end of the 18th century, with bulk imports starting in 1877. However, only in the 1960s did Japanese demand for java soar, notwithstanding its famous tea culture. Between 1965 and 1980 demand grew six-fold and these days Japanese consumers drink almost as much as Americans. Similarly, in South Korea, consumption grew considerably between 1982 and 1992.
Annual Coffee Consumption Per Capita (lbs. of beans), 2011
Finland
26.8 lb. (12.2 kg.)
U.S.
9.3 lb. (4.2 kg.)
Japan
7.3 lb. (3.3 kg.)
South Korea
4.8 lb. (2.2 kg.)
Vietnam
2.4 lb. (1.1 kg.)
Taiwan
2.3 lb. (1.0 kg.)
China
0.02 lb. (0.01 kg.)
While the region’s new coffee drinkers may be paving the way, it is unlikely demand in China will climb immediately. There are many challenges to growth—complexities surrounding the import of beans and coffee powder, material import duties and taxes, just to name a few. These factors have pushed the cost of coffee well above the reach of the average consumer. Currently, only the well-off lounge in the overstuffed sofas of Chinese coffee shops. But we know that times do change. And we may well see a sharp rise in demand over the next decade as global players and locals all enter this underpenetrated market.
Between 2012 and 2013, Starbucks opened 500 stores in China—more than it opened in the previous 12 years and the company has set a target of 1,500 stores by 2015. And they are not alone. Taiwanese, Korean, Singaporean and Australian chains, too, are all planning rapid expansions of their own chains. And this is even before the usual army of ubiquitous local competitors sets up shop. All these efforts combined could raise exposure, spread the taste for coffee and ignite demand.
Should Chinese demand build, global supply of the commodity could be strained. If China’s coffee demand approaches annual consumption even just below Taiwan’s relatively low 1 kg. per capita, then China would be consuming the equivalent to over 22 million bags (60 kg.) of coffee—accounting for around 24% of total exports, up from less than 1%. This kind of growth could have a big impact in a market where it took global exports a decade to increase only 4.4% while prices rose by 69%/lb. (ending in 2010).
We could see Chinese demand (not to mention demand from other emerging markets) impacting prices sharply. Once coffee culture in India starts brewing, let’s hope we can all still afford our favorite cup of joe. In a world of fairly static supply growth, it seems we might need to wake up and smell the coffee.
Opinion column by Robert Harvey, CFA; Portfolio Manager, Matthews Asia
The views and information discussed represent opinion and an assessment of market conditions at a specific point in time that are subject to change. It should not be relied upon as a recommendation to buy and sell particular securities or markets in general. The subject matter contained herein has been derived from several sources believed to be reliable and accurate at the time of compilation. Matthews International Capital Management, LLC does not accept any liability for losses either direct or consequential caused by the use of this information. Investing in international and emerging markets may involve additional risks, such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation. In addition, single-country funds may be subject to a higher degree of market risk than diversified funds because of concentration in a specific geographic location. Investing in small- and mid-size companies is more risky than investing in large companies, as they may be more volatile and less liquid than large companies. This document has not been reviewed or approved by any regulatory body.
ETFGI’s research finds ETFs and ETPs globally have gathered a record US$199.0 Bn in net new assets through the end of Q3 2014, surpassing the previous high of US$185.8 Bn set in the first three quarters of 2012. The Global ETF/ETP industry has 5,463 ETFs/ETPs, with 10,510 listings, assets of US$2.6 Tn, from 225 providers listed on 61 exchanges, according to preliminary data from ETFGI’s end Q3 2014 Global ETF and ETP industry insights report.
YTD NNA flows reached record levels for the ETF/ETP industries in Japan at US$15.0 Bn, Europe at US$47.4 Bn, and globally at US$199.0 Bn.
“In September investors invested the majority of net new money into North American equity exposures. Due to the on-going situation in the Ukraine, Scotland’s referendum vote, and the Bank of England Governor’s statement that a rate increase was “getting closer”, investors reduced their exposure to Europe. The unfavourable geopolitical environment caused the S&P 500 to decline 1% in September. Developed markets declined 4% while emerging markets declined 7%.” according to Deborah Fuhr, Managing Partner at ETFGI.
In September 2014, ETFs/ETPs saw net inflows of US$13.2 Bn. Equity ETFs/ETPs gathered the largest net inflows with US$14.8 Bn, while fixed income ETFs/ETPs saw net outflows of US$449 Mn and commodity ETFs/ETPs experienced net outflows of US$1.5 Bn.
SPDR ETFs gathered the largest net ETF/ETP inflows in September with US$10.5 Bn, followed by Vanguard with US$7.0 Bn, First Trust with US$939 Mn, Van Eck with US$858 Mn and Wisdom Tree with US$789 Mn.
iShares is the largest ETF/ETP provider in terms of assets with US$980.3 Bn, reflecting 37.3% market share; SPDR ETFs is second with US$431.6 Bn and 16.4% market share, followed by Vanguard with US$406.8 Bn and 15.5% market share. The top three ETF/ETP providers, out of 225, account for 69.3% of Global ETF/ETP assets, while the remaining 222 providers each have less than 4% market share.
Mario González-Pérez and Álvaro Fernández Arrieta. Courtesy photo. Capital Group Opens Office in Madrid with Álvaro Fernández Arrieta and Mario González
Capital Group has opened its first office in Spain, in Madrid, as part of its expansion plans in a number of strategic markets (11 in total) outlined at the start of 2014.
The Madrid based Business Development Managers are Álvaro Fernández Arrieta and Mario González Pérez.
Grant Leon, head of Sales, Private Wealth Distribution at Capital Group, said: “Spain is an important market where we are seeing demand from existing and prospective clients for investment managers that offer long-term stability. We are very happy to announce the establishment of our new office in Madrid, demonstrating our commitment to Spain. Working with clients in their home market is key to ensuring that we continue to understand and anticipate their needs and provide a personal and efficient service.”
Fernández Arrieta joined Capital Group from Amundi Asset Management in July 2014 with over twenty years’ experience in the sector, while González Pérez has been with Capital Group for over 10 years.
Both will be responsible for nurturing relations with existing clients, and for developing new business opportunities, in Spain.
Capital’s equity offering includes US, European and emerging markets funds. Its fixed income offer focuses on high yield and emerging debt. Capital Group’s entire range of strategies, which comprises 20 Luxembourg funds, is registered in the Spanish market.
With assets under management (AUM) of US$1.8 trillion the U.S. market for exchange-traded funds (ETFs) is more than three times that of Europe, and is growing at a faster rate. But there are signs that European ETFs are on the cusp of a new phase of growth, particularly in the retail market, driven by influential new entrants and a favorable regulatory climate, according to the October issue of The Cerulli Edge-Global Edition.
“Costs are coming down not only because of greater competition but also in response to the demands of retail investors using ETFs as strategic core holdings,” says Barbara Wall, Europe research director at Cerulli Associates.
“Although U.K. advisors have been slow to embrace ETFs post retail distribution review, a growing number are exposed to ETFs through model portfolios. Take-up is also gaining momentum in other European markets, notably Germany and the Netherlands. The shift will be given a significant boost by the Markets in Financial Instruments Directive.”
The smart beta bandwagon is also gathering pace amid growing demand for innovative passive investment strategies. Last year, ETFs employing smart beta approaches grew by 59% in the United States, and accounted for more than one-third of cash inflows into the asset class. Value and dividend strategies were popular with investors and advisors, accounting for 56.6% of U.S. smart beta exchange-traded products, while growth products account for a 21.7% marketshare.
“The advantages of ETFs are beginning to be felt in South America and Asia,” notes Angelos Gousios, a senior Cerulli analyst. “Exposure to China through Renminbi Qualified Foreign Institutional Investor (RQFII) ETFs has exploded since their launch just over two years ago, and allocations to cross-border ETFs by Latin American pension funds have grown on average 35% annually for the past four years, and are catching up with allocations to cross-border mutual funds.”
In LatAm, Mexico is home to the largest locally domiciled ETF market in Latin America with one-half of the region’s listed ETFs, and assets of US$6.2 billion, or almost two-thirds of the region’s total. Almost 60% of these funds are dedicated to equity strategies with the majority focused on the domestic market. The rest are fixed income.
In China, the market for RQFII ETFs appears to be thriving. The first was launched more than two years ago, but 16 are now trading on the Hong Kong stock exchange, and several more have been listed in New York and London. Cerulli believes that the RQFII ETF space will continue to gain traction as demand for exposure to China grows, and the RQFII program is likely to continue to be developed by the Chinese authorities as they strive to internationalize the renminbi.
Growth in USA
Cerulli estimates that 32.5% of ETF assets in the United States–which should surpass US$4.5 billion in 2015–are owned by U.S. institutions. Almost three-quarters (70%) of ETF providers say increased institutional adoption will be a major driver of growth over the next 12 months, which is a significant jump from 2013, when the figure was just 38%.
