China’s ETFs Double in Number, Size in Three Years
Cao Lu
DATE:  Feb 23 2024
/ SOURCE:  Yicai
China’s ETFs Double in Number, Size in Three Years China’s ETFs Double in Number, Size in Three Years

(Yicai) Feb. 23 -- The number and asset value of exchange-traded funds listed in China have doubled over the last three years.

The more than 900 ETFs traded in the country as of yesterday had net assets of CNY2.4 trillion (USD333.5 billion), according to statistics from data provider Wind Information, up from 410 funds and CNY1.2 trillion of net assets at the end of January 2021.

Besides the efforts of public fund managers, brokerages have been expanding their offerings of these popular investment products. ETFs have become a key development pillar for the wealth management businesses at brokers amid volatile market conditions, a securities industry source told Yicai. 

From the start of the year to Feb. 21, the ETFs had a net inflow of CNY385 billion (USD53.5 billion), according to Wind data. CNY189.4 billion of funds entered the market over nine trading days this month. Many ETFs has swelled further amid these inflows, with three reaching over CNY100 billion each and 20 exceeding CNY10 billion (USD1.4 billion) apiece.

Against the challenging backdrop of new fund issuance, several brokerages have still been able to grow their funds.

Another industry insider said that as products with excess returns become increasingly difficult to find, ETFs can become the core underlying tool for asset allocation due to their advantages of low rates and flexible trading.

With China’s financial institutions having cut their management fees, the commission-based business securities model has been broken. The restrictions on the commissions system have also impacted the ETF sales model, prompting wealth managers at brokerages to act as buyer-oriented advisory services rather than sellers.

Shifting into buyer-oriented advisory services and adopting passive investing are inevitable trends in the long run, the source said. Brokerages are expected to take a larger share of the wealth management market by advising on fund investments and offering ETFs, he noted.

Editor: Martin Kadiev

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Keywords:   ETF,Securities,Asset Management