SSGA debuts broad-market China A-shares ETF

Oct 29th, 2015 | By | Category: Equities

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State Street Global Advisors (SSGA), the asset manager behind the SPDR range of exchange-traded funds, has launched the SPDR MSCI China A Shares IMI ETF (XINA), SSGA’s first index-based offering of renminbi-denominated, domestically-listed Chinese shares.

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SSGA’s first China A-shares ETF tracks a broader index of shares than many competitors.

The fund offers investors broad access to the A-shares of companies incorporated in mainland China which represent approximately 51% of the Chinese equity market. Until recently these shares were only available to China-domiciled investors, but recent Chinese government schemes, such as the Renminbi Qualified Foreign Institutional Investor and the Qualified Foreign Institutional Investors programs, have allowed foreign investors to access the market.

“Given that China is both the second largest economy and the second largest equity market in the world, we feel it’s important to have exposure in your portfolio,” said Michael Arone, chief investment strategist for State Street Global Advisors’ US intermediary business. “Broader exposure, with the benefits of diversification may be valuable in the long-term as these market developments create potentially long-term investment opportunities for A-shares even as short-term volatility may remain high.”

The SPDR MSCI China A Shares IMI ETF seeks to track the performance of the MSCI China A International IMI Index. The index captures large-, mid- and small-cap representation of Chinese companies with A-share listings on the Shanghai or Shenzhen Stock Exchanges. As of 30 September 2015, the Index was comprised of 1795 constituents. Alternative exposures to the A-share market, such as the CSI 300 Index and the FTSE A 50 Index, can potentially limit exposure to only large- and mid-cap stocks.

“As the Chinese market becomes more accessible to investors outside of China, clients have asked for an A-shares ETF designed to track a broad-based and well known index,” said Nicholas Good, chief operating officer of the US intermediary business at SSGA. “While volatility in the A-shares market has been elevated recently, the Chinese government has announced near-term policy actions to restore investor confidence and we believe that the domestic Chinese equity market will continue to emerge as a long term staple of investor portfolios.”

SSGA’s latest offering joins a wealth of options available to investors looking for exposure to physical China A-Shares from providers including Source, Lyxor, Deutsche AWM, iSharesETF Securities and, most recently, CSOP Asset Management.

The SPDR MSCI China A Shares IMI ETF has a gross and net expense ratio of 0.65% and has been listed on the NYSE Arca.

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