China’s ETF Industry: Short History With Rapid Growth

November 03, 2016

[Editor’s note: This is the second article in a series of Chinese ETFs in the U.S. Today’s focuses on ETFs listed in China. Read the first installment here: “Chinese ETFs; All Things Considered.”]

The Chinese asset management industry is short on history, yet rapid on growth. Mutual funds first came to market in the late 1990s, and stayed muted until last few years. The industry has broken through $1 trillion (U.S. dollars) earlier this year, as many top asset management firms pushed new products to the market, including ETFs.

The ETFs products are still in their early stage of growth, with just over $24 billion in assets under management (AUM), as of October 2016, tracking primarily Chinese A-shares indexes. However, ETFs are gaining traction quickly.

The top ETF products in China already rival the sizes of the largest Chinese-focused ETFs listed in this country. Similar to the U.S., there is a great concentration of assets among the top products. Of the 91 listed ETFs, the top 10 products gathered more than $20 billion, or nearly 88% of all the assets.

Top Players

The Beijing-based China Asset Management (AMC), one of the largest and most seasoned asset managers, is the provider of the No. 1 ETF in China, the China 50 ETF. This ETF is close to $4 billion in AUM, comparable to the size of iShares China Large-Cap ETF (FXI), the largest Chinese ETF listed in the U.S.

China 50 ETF tracks the SSE 50 Index, an index less known in the international market, representing a full picture of high-quality firms traded on the Shanghai Stock Exchange. Other top ETF issuers include some of the largest asset managers in China, such as Huatai, China Southern, Huaan, Harvest and E-Fund. 

 

 

International providers are also entering the Chinese market, mostly through a joint venture structure. For example, PineBridge, Investco, Credit Suisse, Allianz, to name a few, have made their presence known. So far, PineBridge seems to be the most successful international firm. One of its joint venture products with Huatai, the CSI 300 ETF, has become one of the top two largest ETFs in China. They also have lined up differentiating products.

 

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