BMO Global Asset Management, one of the fastest growing Exchange Traded Funds (ETF) providers globally, has introduced three ETFs in Hong Kong, making it the first Canadian bank to launch ETFS in Hong Kong.
The ETFs is to be handled by BMO Global Asset Management, a part of BMO Financial Group.
The three ETFs, including BMO Asia USD Investment Grade Bond ETF, BMO Hong Kong Banks ETF and BMO Asia High Dividend ETF, listed on the main board of the Stock Exchange of Hong Kong Limited (SEHK) on Nov 13.
BMO Hong Kong Banks ETF and BMO Asia High Dividend ETF are the first ETFs that track NASDAQ indices in Hong Kong, while the BMO Asia USD Investment Grade Bond ETF is also the first ETFs in Hong Kong that tracks the Barclay Asia USD Investment Grade Bond Index.
The global investment manager with 24 offices located in 14 countries said it was confident in developing innovative and responsible ETFs to Hong Kong investors, together with NASDAQ and Barclays.
The leading provider of ETFs, which first introduced them in Canada in 2009, mainly focuses on delivering high-income levels based on sustainable underlying portfolio yields.
According to Managing Director Amit Prakash with the firm's Hong Kong ETF team, the demand for income and growth may not be met by fixed income investment alone in the low interest rate environment, and the dividend-paying stocks offer a competitive yield and growth potential.
“Investors can capitalize on the rapid development of Asian capital markets and tap the growth story in the region,” he said.
“As one of the top ten largest fixed income ETF providers in the world, we understand the need for income.”
Both the bond and equity ETFs launched will pay regular dividends, allowing investors to earn income while benefiting from Asia’s continued growth, he said.
Prakash said the company holds a positive outlook for the region’s economy and capital markets and more specifically, the financial services sector.
“We have seen a shift from companies using bank loans to financing expansion through capital market activity and our ETFs allow investors to participate in these underlying trends through products which offer long-term capital preservation and appreciation potential,” he said.
The recent agreement to establish a Canadian Renminbi hub has also been applauded by many Canadian companies, describing the joint efforts of the Canadian and Chinese government as fantastic news for companies from both countries.
"The trading hub will ensure that Canadian firms doing business in China can purchase RMB on the open market without converting to another currency first,” said C.J. Gavsie, global head of FX Products & China Capital Markets, BMO Capital Markets, who joined Canada Prime Minister Stephen Harper and Ed Fast, Canada's minister of trade and minister for the Asia-Pacific Gateway, at the announcement in Beijing.
“As we've seen in other jurisdictions, the cost savings will lead to more trade,” said Gavsie. “This, in turn, will create more jobs for Canadians."
If patterns seen in other global RMB hubs are replicated in Canada, total trade could double or even triple between Canada and China in the 12 months following the establishment of a hub, he said.
The hub will also enhance Canada's brand around the world, he said.
"Canada's banking system has already been rated the soundest in the world for the past seven years by the World Economic Forum, and Bloomberg has ranked Canada in second place in its list of the most attractive destinations for business,” he said.
“Becoming an RMB hub will increase the diversity of our financial sector, and make Canada an even more appealing place in which to invest and do business."
With the global reach of the BMO Financial Group, it vows to continue focusing on developing ETF strategies for Hong Kong by drawing on BMO Global Asset Management’s existing expertise dividend based smart beta strategies and fixed income ETF products.
"BMO Global Asset Management is a pioneer in the ETF market and has a reputation for responding to investor needs," said Kevin Gopaul, CIO and global head of ETFs, BMO Global Asset Management.
"Building on our strong track record and leveraging our experienced team in Canada, we're excited to be able to introduce our first three ETFs for Hong Kong investors that are designed specifically to address key investor needs in the region."
ABOUT THE THREE ETFs
BMO Asia USD Investment Grade Bond ETF is the first ETF in Hong Kong that offers Asia USD bond exposure to over 450 Asian bonds across 150 issuers, giving investors an investment vehicle that aims to provide regular income with a potential for long term capital preservation. It invests in high credit quality sovereign and corporate investment grade bonds denominated in US dollars that tracks the performance of the Barclays Asia USD Investment Grade Bond Index.
BMO Hong Kong Banks ETF is the first ETF in Hong Kong to invest in Hong Kong listed bank stocks with a potential for attractive dividend yield, to be paid out twice a year. It tracks the NASDAQ Hong Kong Banks Index through a full replication strategy. This ETF will provide investors access to 10 to 20 banks in one single trade, as well as exposure to a key economic sector that is a proxy for the growth of the Greater China economies.
BMO Asia High Dividend ETF seeks to track the NASDAQ Asia ex Japan Dividend Achievers Index, which consists of more than 150 stocks that offer sustainable, attractive dividends in Asia ex Japan. It is one of the very few high dividend yield ETFs that provides a broad equity exposure and generates regular income with potential for long-term capital appreciation.
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