ETF market booms, hitting almost US$14 billion

Huang Yixuan
More than 500 exchange traded funds have been issued on the Chinese mainland and China's ETF sector leads Asia.
Huang Yixuan

Over 500 exchange traded funds have been issued on the Chinese mainland, and domestic ETFs launched this year are worth about 90 billion yuan (US$13.94 billion).

An ETF is a type of security that tracks an index, sector, commodity, or other asset, but which can be purchased or sold on a stock exchange the same as a regular stock. 

Wind Information said that the surge of ETFs this year has taken the total on the mainland to 507 as of Monday, with a total of 1.26 trillion yuan in assets under management.

On June 21, nine ETFs debuted tracking the STAR&ChiNext 50 index, nicknamed the "Double Startup 50" index and which draws its components from Shanghai's STAR Market and Shenzhen's ChiNext Board.

The 136 ETFs launched so far this year raised 93.685 billion yuan.

Of the 507 funds, 450 are equity ETFs, topping a combined 860 billion yuan.

ETFs have become increasingly popular in global markets as they are more cost-effective, convenient and transparent than traditional mutual funds, leading to rapid growth in the global number of ETFs and their assets under management.

"The value of ETFs in asset allocation has been further highlighted during the structural bull market in the past two years," said Liang Xing, head of quantitative investment at Guotai Fund.

A range of ETF products has been actively deployed by major fund managers since last year, Liang said, adding the domestic ETF market was expected to continue to expand as there's a high market demand for such products with low expense ratios, abundant liquidity, a range of investment choices, diversification, and a low investment threshold.

The ETF market in China has grown in 17 years from scratch to the second largest in Asia, with the highest trading volume – a great achievement, said Liu Jun of Huatai-Pinebridge Fund Management.

Liu believes the domestic ETF market will continue to increase the number and scale of products, build a more complete product system, strengthen the leading effect among a variety of broad-based, industry, and sector indexes, and tap the growth potential of capital stocks.


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