Goldman Looks to Chinese Bonds to Boost Europe ETF Expansion
Goldman Looks to Chinese Debt to Boost its European ETF Business
(Bloomberg) -- Goldman Sachs Group Inc.’s asset management unit is rolling out a new exchange-traded fund aimed at European investors that will focus on Chinese sovereign debt.
The New York-based bank plans to list the Goldman Sachs Access China Government Bond UCITS product on Thursday in London and Frankfurt, according to a release from the company. The ETF, the firm’s second for Europe’s $900 billion market, will charge a fee of 35 basis points a year.
With the inclusion of China’s yuan-denominated government and policy bank bonds into the Bloomberg Barclays Global Aggregate Index in April, demand for the securities is set to increase. JPMorgan Chase & Co. and FTSE Russell are also expected to include Chinese debt in their fixed-income gauges, fueling investor interest.
Goldman expects $150 billion to flow into the Chinese bond market as a result, according to Andrew Wilson, chief executive officer for EMEA at the bank’s asset management unit.
“Over the next 3 to 5 years, we’re going to see increased interest from investors to get access to that market,” Wilson said in an interview on Bloomberg TV Wednesday. “It’s a way to get in at a very early stage, but I think over time we’d expect to see significant flows going into the Chinese markets.”
Goldman’s product joins BlackRock Inc.’s iShares China CNY Bond UCITS ETF, which started trading in Europe earlier this year with a fee of 35 basis points, and has gathered $99 million in assets. Another regional product -- the Xtrackers II Harvest China Government Bond UCITS fund -- carries a 40 basis point fee and has collected $43 million in assets.
Goldman listed its first ETF for the European market in September, a multi-factor fund that is a carbon copy of its mega-successful U.S. product, GSLC. The firm will continue to expand its offerings in the region over the next six months, according to the statement.
Peter Thompson, head of Goldman’s European ETF business, said in September that the bank plans to introduce around 10 new products in both fixed income and equities by the end of the first quarter of 2020.
To contact the reporter on this story: Ksenia Galouchko in London at kgalouchko1@bloomberg.net
To contact the editors responsible for this story: Blaise Robinson at brobinson58@bloomberg.net, Yakob Peterseil, Rachel Evans
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