Daily ETF Watch: China Fund Launches

July 24, 2014

Van Eck today is launching its mainland China-focused Market Vectors ChinaAMC SME-ChiNext ETF (CNXT), the latest exchange-traded fund focused on companies listed on largely untapped stock markets in Shenzhen and Shanghai.

The ETF is organized around a free-float-adjusted index that tracks the 100 largest and most liquid stocks listed and trading on the “Small and Medium Enterprise Board” and the ChiNext Market of the Shenzhen Stock Exchange.

The fund is part of a growing trend to tap into China’s mainland companies that are listed in either Shanghai or Shenzhen. The trend began accelerating last year with the launch of the db X-trackers Harvest CSI 300 China A-Shares Fund (ASHR | D-52). The ETF now has $205 million.

Fund sponsors have since been heavily focused on the so-called A-share market in hopes it will be the focal point of China’s resurgence, as the world’s most populous country shifts its economic focus to developing domestic markets instead of emphasizing exports.

The fund has a net annual expense ratio of 68 basis points, or $68 for each $10,000 invested, according to the latest prospectus detailing the fund.

The launch date was made public on Tuesday in an electronic communique from NYSE Arca.

Indexing

 

S&P Dow Jones Indices has launched the S&P Quality Index family designed to measure high-quality stocks in the global equity markets on the basis of their quality score, which is calculated based on three fundamental measures: return on equity; accruals ratio; and financial leverage ratio.

The index family consists of 12 headline indexes that cover major global regions and countries, including:

  • S&P Quality Global LargeMidCap Index
  • S&P Quality Developed LargeMidCap Index
  • S&P Quality Developed Ex-U.S. LargeMidCap Index
  • S&P Quality Developed Ex-Japan LargeMidCap Index
  • S&P Quality Emerging LargeMidCap Index
  • S&P Quality Europe LargeMidCap Index
  • S&P Europe 350 Quality
  • S&P Quality Pan Asia LargeMidCap Index
  • S&P Quality Pan Asia Ex-Japan LargeMidCap Index
  • S&P Quality Japan LargeMidCap Index
  • S&P 500 Quality
  • S&P Quality United States LargeMidCap Index

The launch follows the launch of low-beta and intrinsic value indexes earlier this year. Factor-based

indexes are strategy indexes that seek to capture performance characteristics differently than traditional cap-weighted benchmarks.

ETF issuers using those have marketed their products as factor-based strategies dubbed “smart beta” in an attempt to extract extra systematic returns through indexing.

 

 

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