Amundi launches ETF tracking FTSE Russell’s China A50 Index

Oct 31st, 2016 | By | Category: Equities

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European exchange-traded fund provider Amundi has launched a new ETF on the Hong Kong Stock Exchange which provides access to some of China’s largest A-Share companies. The Amundi FTSE China A50 Index ETF tracks FTSE Russell’s China A50 Index, a reference for the market cap-weighted performance of the 50 largest companies listed in mainland China.

Amundi launches new ETF benchmarked to FTSE China A50 index

The FTSE China A50 Index tracks the performance of the 50 largest companies listed in Shanghai (pictured) or Shenzhen.

A-shares are securities of Chinese-incorporated companies that trade on either the Shanghai or Shenzhen stock exchanges. They are quoted in Chinese yuan and can only be traded by residents of the People’s Republic of China or under the Qualified Foreign Institutional Investor (QFII) and Renminbi Qualified Foreign Institutional Investor (RQFII) schemes.

Due to the restrictions placed upon A-shares, they are not currently included in FTSE’s standard global benchmarks. Gradual and positive market developments with respect to a number of areas of FTSE’s ‘Quality of Markets Matrix’ has moved the share class closer to being incorporated into several key global indices.

Matthieu Guignard, Global Head of Product Development and Capital Markets at Amundi ETF, Indexing & Smart Beta, commented: “We decided to launch this ETF tracking the FTSE China A50 Index on Hong Kong stock exchange to meet investors’ demand for cost-efficient investment solutions to get exposed to the potential of the Mainland China market through A-shares. We’re happy to add this new allocation brick to our range on the FTSE China A50 Index – one of the leading indices on China – with the lowest cost on Hong Kong market”.

Sudir Raju, Managing Director ETP Relationships, Asia, FTSE Russell, added: “We are delighted that Amundi has decided to licence a FTSE Russell index to support the expansion of their ETF offering. FTSE Russell works closely with a number of firms in the Asia region and its strong track record in developing China-based indices means that there are now over ten ETFs benchmarked to our indices”.

With just 50 constituents, the index has significant exposure to the financial sector. Banks (44.4%), insurance companies (13.0%) and financial service firms (12.4%) make up the largest ICB Supersector allocations as of 30 September 2016. The top ten constituents account for 51.0% of the index’s total market capitalization and the five largest holdings are Ping An Insurance (9.3%), China Minsheng Banking (6.8%), China Industrial Bank (6.5%), China Merchants Bank (6.3%) and Shanghai Pudong Development Bank (5.2%).

As of 30 September 2016 the index is down 7.5% year-to-date, mainly due to increased volatility in global equity markets at the start of the year. It has been recovering lately though with the index up 5.2% over the past three months.

The ETF has a total expense ratio (TER) of 0.48%.

European listed ETFs which track the FTSE China A50 Index include the iShares China Large Cap UCITS ETF (LON: FXC), which has $570m in AUM and a TER of 0.74%; the db x-trackers FTSE China 50 UCITS ETF (LON: XX2D), which has £165m in AUM and a TER of 0.60%; and the Source CSOP FTSE China A50 UCITS ETF (LON: CHNA), which has $21m in AUM and a TER of 0.99%.

HSBC and ETF Securities offer ETFs tracking the MSCI China A Index, a broader reference for the performance of large- and mid-cap China A-Share equities. Their TERs are 0.60% and 0.88% respectively.

China-focused ETFs are also available from WisdomTree and Lyxor.

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