Hyperbole aside, the A-share market's recent performance suggests that, while not quite "unlimited", it does at least have the potential to continue its very strong growth. The challenge for many investors is how to go about tapping into that growth.
Lyxor's China A Fund aims to broadly track the S&P/Citic 50, which represents the largest and most liquid stocks in China's A-share market, as decided by Standard & Poor's and Citic. So far this year, the index has already risen by considerably more than 100% and is about 185% up year-on-year. That represents a significantly better return than the comparable FTSE/Xinhua A50 index.
That said, the fund is not intended to be a straight index tracker. It will invest at least 70% of investors' money in a structured note that will closely mimic the performance of the index, but the rest of the portfolio will be invested in more liquid offshore securities û such as H-shares, red chips and related exchange-traded funds û that will provide some correlation to the A-share market but which can be traded more freely.
The fund launched on July 23 and is distributed by Bank of China, Chiyu Bank, DBS, Hang Seng Bank, HSBC, Nanyang Commercial Bank and Standard Chartered. It is denominated in US dollars and the minimum investment is $3,000. The management fee is 1.25% a year.