KUALA LUMPUR: Value Partners Asset Management Malaysia Sdn Bhd has launched the VP-DJ Shariah China A-Shares 100 ETF, the world’s first A-share exchange traded fund (ETF) that tracks the performance of the Dow Jones Islamic Market China A-Shares 100 Index.
The Shariah China A-Shares ETF adopts a full replication strategy, in which the ETF will hold every constituent of the benchmark index, having substantially the same weightings.
The product is also Value Partners Malaysia’s first ETF to be listed on the local bourse.
Value Partners Malaysia is the wholly-owned subsidiary of Hong Kong-based Value Partners Group Ltd, which was co-founded by Datuk Seri Cheah Cheng Hye, who is the co-chairman and co-chief investment officer.
The Shariah China A-Shares ETF provides investors exposure to Shariah-compliant stocks within the China A-Shares equity universe.
With the quantitative criteria adopted by the benchmark index, the Shariah China A-Shares ETF provides investors with exposure to China’s new economy.
This allows them to participate in the country’s changing dynamics and positive growth trends of the economic structure as China moves toward focusing on becoming a consumption- and services-led economy.
China’s new economy includes companies in the technology, consumption, healthcare and 5G space.
The Shariah methodology adopted requires companies to be screened on two levels.
The first is a sector-based screen, where companies in the sin sectors (such as alcohol, tobacco, and gambling), pork-related products, conventional financial services, and weapons and defense, are excluded.
The second is a quantitative screening of liquidity and total debt, based on specified and approved metrics.
Because of these screens, Shariah-compliant companies usually have strong business fundamentals supported by healthy balance sheets.
To meet its investment objective, the Shariah China A-Shares ETF can invest up to 100% of its net asset value (NAV) in authorised securities, with an option to invest a maximum of 10% in Islamic collective investment schemes, Islamic money market instruments and/or Islamic deposits.
Value Partners Malaysia managing director Durraini Baharuddin (pic, below) said the Value Partners has a long track record of delivering superior investment performance for nearly 30 years and strived to provide innovative products to investors.
“Our new Shariah China A-Shares ETF is a unique tool for Malaysian investors to capture opportunities in China’s new economy within Shariah principles.”
“We trust that our new ETF will meet the needs of both institutional and individual investors who wish to find value in the China A-shares market, ” Durraini added.
With the recent inclusion of China A-shares into global indices, the expected increase of foreign participation in the market may also lead to upward asset revaluation.
Value Partners Malaysia fund manager Kamal Mustadza said: “We have a positive outlook on foreign capital inflows into Chinese markets and continue to remain optimistic.
“China's continued efforts of developing and improving market accessibility over the years have made the market too big for investors to ignore.”
The VP-DJ Shariah China A-Shares 100 ETF is managed by Value Partners Malaysia and holds physical shares as underlying investments. It is the flagship fund of Value Partners Malaysia’s offering to institutional and individual investors in Malaysia.
The Dow Jones Islamic Market China A-Shares 100 Index outperformed the CSI 300 Index by delivering cumulative returns (in ringgit) of +49.2%, +80.7% and +118.7% over the 1-, 3- and 5-year periods, respectively, vs. the CSI 300 Index’s +34.4%, +66.2% and +94.7% for the same periods, as of 29 June 2021.
The top three sectors of the benchmark Index comprise of industrials (31.5%), healthcare (26.3%) and consumer goods (16.5%).
A listing ceremony, co-organised by Bursa Malaysia and Value Partners Malaysia, will be held on July 28, 2021. The Shariah China A-Shares ETF will be launched at an initial issue price of RM2 per unit.