DWS has extended its China equity ETF suite with the launch of a synthetic China mid-cap ETF.
The Xtrackers CSI500 Swap UCITS ETF (XCSI) is listed Deutsche Boerse and will list on the London Stock Exchange (LSE) on 14 August, with a total expense ratio (TER) of 0.35%.
XCSI tracks the CSI SmallCap 500 index which captures 500 medium and small cap China-listed companies and traded on the Shanghai Stock Exchange or the Shenzhen Stock Exchange.
Synthetic ETFs engage in swap contracts with counterparties, usually investment banks, that are required to deliver the return of the index minus fees.
Despite a regular cadence of China ETF closures – with Global X becoming the latest example with three ETF closures last month – DWS now joins Invesco in launching an ETF capturing Chinese equities in recent months.
The opposing approaches highlight that investors remain torn on the benefits of allocating to China in the current market backdrop.
Bright spots for the region emerged in H1 with better-than-expected GDP data alongside China ETFs leading gains for monthly returns in May.
Yet, over the last three months, China focused ETFs have struggled to bring in returns, with the Invesco S&P China A MidCap 500 Swap UCITS ETF (CM5S) returning -14.4%.
Despite this, investors have often been able to benefit from the additional performance from the carry swap fees.
Last week, DWS switched the index on its emerging markets ETF to exclude China, creating the Xtrackers MSCI Emerging Markets ex China UCITS ETF (XDEG).
Elsewhere, DWS’ latest headline launch came in April when it entered the crypto exchange-traded product (ETP) market with the launch of two strategies tracking bitcoin and ethereum.
