Former executives at BlackRock Inc. think they've found a way to succeed with Chinese exchange-traded funds where their erstwhile employer failed to gain traction — in Hong Kong.
The key, in a phrase, is multifactor smartbeta.
Premia Partners Co. — established by BlackRock alums Aleksey Mironenko and Rebecca Chua, China Asset Management (Hong Kong) Ltd. veteran David Lai, and former ICBC Credit Suisse Asset Management International banker Laura Lui — is seeking approval from Hong Kong's Securities and Futures Commission for two smart-beta funds targeting global investors in Asia. They would be the first Chinese ETFs globally to use more than one factor in the increasingly popular strategies.
Each fund will contain 300 China stocks with portfolios set up through a multifactor program, which is based on categories beyond market capitalization such as profitability, value, low volatility, asset growth and quality. One of the ETFs focuses on China's old economy, while the other concentrates on China's new economy. The firm plans to start selling them next month and received regulatory approval today.
Premia's ambitions fly in the face of the difficulty higher-profile competitors have had in selling Chinese ETFs. Most notably, BlackRock and Deutsche Asset Management this year delisted China sector funds that failed to gather enough assets.