(Yicai Global) May 31 -- The first three exchange-traded funds on the China Securities Index-China Reform Central Government-Owned Enterprises Technology Leading Index, which tracks strongly performing central government-owned companies in the field of technology, were given the greenlight yesterday.

The EFTs submitted by fund managers Southern Asset Management, E Fund Management and Yinhua Fund Management will feature on the index run by China Securities Index and China Reform Holdings Corp., which is the first to link central government-owned enterprises with technology.

ETFs on the index will serve as excellent investment tools for investors and bring new capital to the fields covered by the index, an industry insider told Yicai Global. The index’s 50 constituent stocks are mostly in primary sectors such as the military, computers, communications and mechanical equipment as well as high-end manufacturing industries including aviation equipment, chips, and integrated circuits.

The index focuses on core technology fields, rapid profit growth and large investment in research and development, Southern Asset Management said. The index complements other technology indexes that focus on new energy.

The index logged a 90.58 percent in return on investment from 2018 to March this year with an annual Sharpe ratio of 0.77, both higher than other indexes of its kind and the CSI 300, per Southern Asset Management.

Efforts to improve the quality of listed central government-owned firms have worked in recent years and the market is paying more attention to such firms this year. Only one quarter of the companies listed on mainland stock markets were state-owned as of March, but their combined market capitalization took up nearly half the total.

Nine public funds including GF Fund Management, Harvest Fund, Southern Asset Management and China Merchants Fund had applied for their funds to trade on indexes targeting central government-owned enterprises as of March 14.

Three ETFs run by GF Fund Management, China Merchants Fund and China Universal Asset Management on the Central Government-Owned Enterprises’ Shareholders Returns Index were approved last month and each raised CNY2 billion (USD281.9 million) in their initial offering on May 24.

Three ETF applications submitted by ICBC Credit Suisse Asset Management, Bosera Funds, and Harvest Fund on the China Securities Index-China Reform Central Government-Owned Enterprises Modern Energy Index are still pending.

Editors: Shi Yi, Kim Taylor