Barclays Global Investors (BGI), a leading assets management company, has filed a prospectus with the US Securities and Exchange Commission to list the iShares FTSE/Xinhua Hong Kong China 25 Index Fund on the New York Stock Exchange.

If approved, the fund will be added to BGI's international exchange traded funds (ETF) line-up.

The move was announced yesterday by FTSE/Xinhua Index Limited (FXI), the China index provider.

ETF is a fund that tracks an index, but can be traded like a stock. ETFs always bundle together the securities that are in an index. Investors can do just about anything with an ETF that they can do with a normal stock.

They are widely regarded as more tax-efficient than normal mutual funds and since they track indexes, they have very low operating and transaction costs.

Officials with the company said the commission's approval procedure usually took nine to 12 months, meaning US investors may be able to begin trading the fund in the last quarter of the year.

The to-be-listed ETF will track the FTSE/Xinhua China 25 Index, which features the largest, most liquid Chinese equities available to foreign investors.

The index reflects the performance of Chinese mainland-listed hard-currency B shares, H shares (shares issued by mainland companies, but listed in Hong Kong) and red-chips (Hong Kong-listed shares issued by Hong Kong-registered companies with a mainland background).

The index constituents are accurately classified according to the sector definitions of the FTSE Global Classification system.

FXI is a joint venture between London-headquartered FTSE Group, the global index company, and Xinhua Financial Network, a leading China financial information provider with China's official Xinhua News Agency as its single largest shareholder.

Mark Makepeace, chairman of FXI and chief executive officer (CEO) of the FXI Group, said he was very excited to bring the first China ETF to the US market in partnership with BGI.

"International investors are eager for a China index series that adopts transparent global standards," he said.

Fredy Bush, FXI's director, believes the creation of the ETF confirms that the methodology and design of FTSE/Xinhua Indexes are widely accepted by international investors.

"Applying our proven capability and experience in the Chinese market, we strive to provide investment opportunities tailor-made for local requirement. FXI aims to contribute to the growth and internationalization of China's financial markets," Bush said.

Lee Kranefuss, BGI's CEO of Individual Investor Business, said he was delighted to work with FXI to provide innovative products to help investors diversify and globalize their portfolios.

"There is strong demand for a cost-effective and tax-efficient way to gain access to the largest, most liquid Chinese securities," Kranefuss said.

"The iShares FTSE/Xinhua Hong Kong China 25 ETF is a great complement to the current international iShares line-up."

There are currently 26 ETFs listed on FTSE Indexes with almost US$810 million in assets under management.

FTSE had previously licensed 12 indexes to BGI for use as the basis of iShares Funds, including the widely used FTSE 100 and FTSE Eurotop 100 Indexes.