According to two people with close knowledge of the matter, BlackRock, Inc. BLK plans to launch its first product in China's $220 billion onshore exchange-traded funds (ETF) market later this year and has started hiring accordingly.
The world's largest money manager, which thrives on the rise of passive investing with 70% of its $10 trillion global portfolio in ETFs and index funds, will be the first wholly-owned foreign fund manager to enter China's onshore ETF market, writes Reuters.
Presently, the U.S. firm manages overseas assets of a handful of China's large state-backed investors.
According to Reuters, the first BlackRock ETF product launch is planned for the fourth quarter, which will add 6.8 billion yuan ($1.07 billion) worth of assets BlackRock manages through two mutual funds with investments in Chinese and Hong Kong stocks.
BlackRock is yet to decide which index to track for the first ETF product, the people said. Options under consideration include a carbon neutrality-themed index composed by China Securities Index Co, one of the people said.
"BlackRock is committed to helping more Chinese investors achieve their financial goals by bringing them a broader suite of investment products and solutions, including ETF and index investments," the company said to Reuters.
It added it is "investing in more local talent" to support its "growth priority."
Reuters notes that the move will also the fund management's footprint in China, where it was the first global asset manager to be licensed to launch a wholly-owned onshore mutual fund operation last year.
BlackRock's ETF operation in China is set to open doors to both institutional and retail investors.
Price Action: BLK shares are trading higher by 0.30% at $719 during the premarket session on Wednesday.
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