April 30, 2024
By Sharan Kaur Phillora
China Asset Management, alongside Harvest International and Bosera Fund, has been greenlit by the Hong Kong Securities Regulatory Commission to launch spot Bitcoin and Ethereum ETFs.
Here’s what we know:
Among these, China Asset Management’s ETF stands out with a relatively high annual expense ratio of 1.99% compared to Harvest’s and Bosera’s, which are 1% and 0.85%, respectively. This high ratio is partially due to a significant investment in insurance, with the firm securing a $1 billion insurance for the ETF assets. Despite the high starting fee, there is a management fee cap set at 0.99% of assets under management (AUM), with internal assessments suggesting that actual fees could decrease to as low as 0.65%
This development is part of a broader trend in Hong Kong, leveraging its regulatory framework to establish itself as a leader in digital asset investments. The approvals of these ETFs are seen as a step towards integrating digital assets within the financial ecosystem, providing regulated, innovative investment avenues for both retail and institutional investors.
The decision to approve these ETFs follows similar moves in the U.S., where Bitcoin spot ETFs have already attracted significant capital inflows. The move by China Asset Management to insure its ETF assets could provide a competitive edge, potentially reducing the fees further, which would make these ETFs more attractive to investors seeking cost-effective exposure to cryptocurrencies.
The implications of this strategic insurance investment are significant. It not only mitigates the potential financial risks associated with the custody and management of large-scale cryptocurrency assets but also aligns with a global shift towards more secure and institutional-friendly crypto investment products. The anticipated reduction in management fees could catalyze a broader acceptance and growth of cryptocurrency ETFs in Asia, potentially setting a precedent for similar financial products globally.
About the author
Sharan Kaur Phillora’s thirst for knowledge has led her to study many different subjects, including NFTs and Blockchain technology – two emerging technologies that will change how we interact with each other in the future. When she isn’t exploring a new idea or concept, she enjoys reading literary masterpieces.
