UOB Asset Management Ltd (UOBAM) announced the other day that the launch of their United FTSE/Xinhua China A50 ETF has been delayed due to technical issues with the tracking of the index.
Just to recall, the swap-based United FTSE/Xinhua China A50 ETF tries to replicate the performance of China A50 Index by buying participating notes (P-Notes).
The value of a P-Note will be linked to that of a composite portfolio (the “Composite Portfolio”) comprising an underlying basket of A-Shares held by a Qualified Foreign Institutional Investor (QFII) and is designed to track as closely as possible, before fees, costs and expenses (including any taxes and withholding taxes), the performance of the index.
It is currently intended that the first P-Notes issuer will be Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. (“Rabobank”). Investors buying the ETF will have to be aware that one of the risks that are exposed to is the counterparty risk of the P-Notes issuer. For now, that is only Rabobank.
Due to the technical glitch, UOBAM mentioned that they may consider switching to another similar China domestic index at a future date.
The listing of the units in the Fund on the Singapore Exchange Securities Trading Limited will tentatively commence on or around 19 November 2009 and the actual listing date will be announced on the SGXNET as soon as possible.
Investors who have already successfully subscribed to the Fund may wish to note that they have the option to keep their units in the Fund or to redeem them at 80 Raffles Place, Level 2, UOB Plaza 1, Singapore 048624 from 2 p.m. on 12 November to 5 p.m. on 18 November 2009, at the initial offer price of S$2.50 or the prevailing net asset value per unit at the time of redemption, whichever is the higher.