BlackRock slashes fee on $2.4bn iShares FTSE A50 China ETF

Mar 22nd, 2021 | By | Category: Equities

BlackRock has slashed nearly two-thirds off the management fee charged on its Hong Kong-listed FTSE A50 China ETF.

China ETFs management fee A50

BlackRock has cut the management fee on the iShares FTSE A50 China ETF by nearly two-thirds.

The fee on the iShares FTSE A50 China ETF (HKD: 2823 HK; RMB: 82823 HK) has been cut from 0.99% to 0.35%.

The underlying FTSE China A50 index represents the 50 largest A-share companies by market capitalization, adjusted for liquidity and tradability.

A-shares are stocks of companies incorporated in mainland China that trade in Chinese yuan on domestic exchanges such as the Shanghai Stock Exchange and the Shenzhen Stock Exchange.

The hefty fee reduction is no doubt an attempt to increase the fund’s appeal among investors and stem recent outflows. The fund has experienced net outflows every year since 2014, including $1.2bn in 2020 despite a strongly bullish Chinese equity market in the second half of the year.

Assets under management currently stand at $2.4 billion – a far cry from its peak in 2014 when assets stood at $14bn.

The experience of the BlackRock fund is not unique. Its rival, the CSOP AM FTSE China A50 ETF (2822 HK), has suffered a similar fate. The CSOP fund housed around $5bn in 2014 but consistent redemptions have reduced fund assets to approximately $1.8bn now.

Market strategists attribute the loss of interest in these products to several factors including a greater choice of products offering access to China’s onshore market, a preference for exposures to newer growth-oriented sectors which are underrepresented in the FTSE China A50, and a growing contignent of investors opting to pursue an active approach in China.

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