(Yicai Global) Aug. 28 -- China Asset Management, Dacheng Fund and CCB Principal Asset Management have got the starting gun to issue China's first commodity futures exchange-traded funds as China officially inaugurates this public fund investment mechanism.
These pioneering ETFs track the most representative futures price indexes on the country's three futures exchanges, insiders said yesterday.
China Asset Management tracks the bean pulp futures price index on the Dalian Commodity Exchange. Dacheng Fund follows the nonferrous metal futures price index on the Shanghai Futures Exchange, and CCB Principal Asset Management focuses on the energy and chemical futures price index A on Zhengzhou Commodity Exchange, an index dedicated to thermal coal, pure terephthalic acid -- used in polyester production -- methanol and glass.
The earliest application of the three ETFs was China Asset Management's bean pulp futures ETF instituted on Oct. 24, 2016, data from China Securities Regulatory Commission show.
Commodity ETFs invest in physical commodities like agricultural produce, natural resources or precious metals and generally focus on either one commodity or investments in futures contracts. At CNY1,000 (USD140), the investment threshold for commodity ETFs is much lower than that for commodity futures.
The global macro-market environment and supply and demand of commodities mainly underlie fluctuations in bulk commodity prices, but stock markets and bond markets exert less influence. Bulk commodities have strong investment complementarity and reduce portfolios' risk and volatility and increase their risk-return ratio, market participants told Yicai Global.
Editor: Ben Armour