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China’s first cross-border exchange-traded fund (ETF), the Guotai Nasdaq-100 ETF (513100), has begun trading on the Shanghai Stock Exchange. The fund is linked to the Nasdaq-100 Index and is sponsored by Guotai Asset Management, one of the longest-established fund management companies in China.
The fund’s launch represents a significant development for the burgeoning exchange-traded product market in China.
According to BlackRock, the company behind iShares, the world’s largest provider of ETFs, year-to-date inflows into Chinese equity ETPs increased 23.4% to $937.4 billion.
The fund was created so that investors in China could easily invest in the largest and most liquid companies traded on the Nasdaq Stock Market.
Until now, investors in China have been able to access the US market but only through ordinary Qualified Domestic Institutional Investor funds, most of which follow active strategies, are cumbersome to trade and involve lengthy redemption processes.
This new ETF significantly enhances the efficiency of investment in US securities for these investors.
Additionally, because the product trades on the secondary market, like any ETF, prices are transparent and transaction costs are low, making the product appealing to institutional and individual investors alike.
Robert Hughes, Nasdaq OMX Vice President, said: “We applaud Guotai Asset Management for responding to increasing demand among all classes of investors in China for a cross-border ETF. The Guotai Nasdaq-100 ETF enables individual and institutional investors in China to access 100 of the world’s largest and fastest growing companies – including Baidu, Microsoft, Apple and Starbucks.”
The Nasdaq-100 Index measures the performance of 100 of the largest international and domestic non-financial securities listed on Nasdaq Stock Market. The index, which is known for having a strong bias towards technology companies, has posted a cumulative price return of 170.32% during the 10 years ended 31 December, 2012.