Chinese investors get access to U.S. companies via an ETF for the first time.
A Shanghai-listed ETF targeting the same Nasdaq -100 index that underlies the $35 billion U.S.-listed PowerShares QQQ Trust (NasdaqGM: QQQ) launched in China today, a crucial milestone for the world’s No. 2 economy, which marks the first time Chinese investors have access to the U.S. market using an ETF.
The Nasdaq-100 Exchange-Traded Fund (Shanghai: 513100), sponsored by Guotai Asset Management, allows Chinese investors to gain access to the U.S. market with a more efficient vehicle than ordinary qualified domestic institutional investor funds, most of which follow active strategies and are cumbersome to trade and involve a lengthy redemption process, Nasdaq said today in a press release.
“The Guotai NASDAQ-100 Exchange-Traded Fund significantly enhances the efficiency of investment in U.S. securities for these investors,” the prepared statement said, which also stressed that because it trades on the secondary market, prices are transparent and transaction costs are low, making the fund appealing both to institutions and individuals.
The launch of the Guotai Nasdaq-100 ETF may well be a watershed moment in the development for the growing exchange-traded product market in China. According to BlackRock Inc., an independent global investment manager, year-to-date inflows into Chinese equity ETPs increased 23.4 percent to $937.4 billion.
More broadly, the product launch fits neatly into broader trends of the opening of China to the wider world. That’s a two-way street in the world of investments, with Western investors looking to gain access to China’s economy, just as Chinese investors are looking to plow some of their assets into prospective financial markets out of China.
The Guotai Nasdaq-100 ETF gives investors in China access to 100 of the world’s largest and fastest-growing companies, including Baidu, Microsoft, Apple and Starbucks.
The Nasdaq-100 Index had a cumulative price return of 170.32 percent during the 10 years ended Dec. 31, 2012, the statement said.