China AMC claims largest ETF market share in the Mainland

07 December 2017   Category: News, Asia, China, Global   By Asia Asset Management

China Asset Management Corp (China AMC), the sixth largest fund manager in the Mainland by total assets under management, has topped its larger peers in the exchange-traded fund (ETF) market by gaining the largest market share in this space, the company says.

China AMC’s ETF products have delivered a “stellar” performance in the first 11 months of 2017, according to a company spokesperson.

“The company’s ETFs had total AUM of around 61.5 billion RMB (US$9.29 billion) as of November, representing a 30.6% market share of the China equity ETF market. That makes China AMC the country’s largest ETF manager,” the spokesperson tells Asia Asset Management (AAM).

China AMC’s ETF line-up currently includes 16 equity ETFs (20 if those denominated in two currencies are counted separately) and their feeder funds, and one money market-linked ETF.

One of its ETFs – the ChinaAMC CSI 300 Index ETF – is currently the country’s largest equity ETF with total AUM of around 18.5 billion RMB, according to the spokesperson.

The company also plans to launch an ETF tracking the secondary board of the Shenzhen Stock Exchange, or ChiNext, by the end of the month, they say.

The ChiNext-tracking ETF completed fundraising at the end of November, but the company has not as yet announced the launch date.

In terms of performance, 14 of the company’s ETFs and their feeder funds delivered returns exceeding 20% in the year to November, according to figures provided by China AMC.

The ChinaAMC SSE Consumer Staples Sector ETF and ChinaAMC Hang Seng Index ETF Feeder Fund were the top performers for the company, with year-to-November returns of 38.64% and 33.35%, respectively.

“China AMC will continue to press ahead with its ETF development in view of the strong market potential,” the spokesperson says.

For example, fund of funds (FOFs), which were recently approved for launch by the Chinese regulator, are expected to consider ETFs as an important asset allocation tool because of their high transparency and cost efficiency, according to the spokesperson. 

Also, banks, insurers and qualified domestic institutional investor institutions have not as yet developed a significant position in ETF products, so the market still has room to grow, she says.   

“China AMC has developed a wide array of ETF product family, covering onshore and offshore major and industrial indexes,” they note. The next phase, they say, is for the company is to develop smart beta ETFs, as well as products that track state-owned enterprises sectors.

ETFs with special functionality or accessibility will be one of the key trends in China given growing market demand, according to a senior analyst at Shanghai Securities.

“There were 168 ETFs in China managed by 101 fund managers [as at November],” the analyst tells AAM, speaking on condition of anonymity. “However, ETF businesses look less attractive to Mainland fund managers compared to active products due to the former’s relatively low profit margin. As such, the ETF market is still dominated by a number of resource-rich fund managers.” 

China AMC’s mutual fund business currently has total AUM of about 307.2 billion RMB, according to Chinese financial website hexun.com.