On September 23, a new member of the China Securities A-Series Index, the China Securities A500 Index, was officially launched.
On the first day of its release, the China Securities A500 Index experienced a slight decline after a surge.
The first batch of 10 China Securities A500 ETFs that track the index has completed the reporting, approval, and started to be offered for sale.
As of September 22, seven of the China Securities A500 ETFs have completed their fundraising, each reaching the initial fundraising limit of 2 billion yuan and triggering proportional allocation, injecting a total of 14 billion yuan of incremental funds into the market.
In recent years, the concept of index-based investment has gradually taken root in people's hearts, especially ETFs that track broad-based indices have been widely recognized by investors, and institutional funds such as social security, insurance funds, and pension funds have also started to deploy ETFs.
The first batch of China Securities A50 ETFs established in March this year has seen a significant increase in scale.
Mid-year report data shows that as of the end of June this year, the asset size of the first batch of China Securities A50 ETFs has increased to 30.1 billion yuan, an increase of 82% compared to the time of issuance.
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It is understood that the compilation approach of the China Securities A500 Index is different from the compilation plan of the scale index.
The traditional scale index's market value sampling method selects a certain market value ranking range of sample stocks for compilation, but the screening indicators of the sample stocks are slightly single.
The China Securities A500 Index adopts a free-float market value sampling method, which considers the market value and market activity of the constituent stocks, and adds three major standards of ESG, interconnectivity, and industry balance to the sampling method.
Specifically, first, the ESG indicator is one of the important indicators to measure the non-financial profitability and sustainable development ability of listed companies.
The addition of the ESG indicator is more in line with the investment philosophy of medium and long-term investors.
Eliminating companies with low ESG evaluation results can also reduce the possibility of negative risks for listed companies to a certain extent.
Second, the selected sample stocks need to meet the scope of Shanghai-Hong Kong Stock Connect or Shenzhen-Hong Kong Stock Connect.
Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect are the main channels for foreign or Hong Kong capital to enter the A-share market.
In recent years, overseas funds have increasingly chosen to use A shares as one of the long-term assets for allocation.
The China Securities A500 Index selects stocks in Shenzhen-Hong Kong Stock Connect or Shanghai-Hong Kong Stock Connect as sample stocks, which also provides an index tool for foreign capital to invest in A-share assets.
Third, the industry distribution during the index compilation is balanced, and more emerging industry leaders are included, with the combined weight of industries such as industry, information technology, communication services, and medical health accounting for about 50%.
Compared with the CSI 300 Index, the "new quality productivity" content of the China Securities A500 Index is higher.
According to the data on the official website of China Securities Index, as of August 30, 2024, the A500 index sample stocks cover all 35 second-level industries and 92 third-level industries of China Securities, with a second-level industry coverage of 100% and a third-level industry coverage of 93%, higher than the mainstream broad-based index.
Looking at the return and volatility of the China Securities A500 Index in the secondary market, the return level of the China Securities A500 is better than the CSI 300 Index.
According to Wind statistics, from the base date of December 31, 2004 to September 20 this year, the cumulative return of the China Securities A500 Index is 271.72%, with an annualized return of 7.09%, while the cumulative return of the CSI 300 Index is 218.83%.
The volatility is comparable to the CSI 300 Index, with an annualized volatility of about 21.8% over the past decade.
Seven ETFs have raised 14 billion yuan to track the China Securities A500 Index, and the ETFs tracking the China Securities A500 Index have been quickly approved and launched.
Since the China Securities Index Company announced on its official website on August 27 that the China Securities A500 Index would be officially launched on September 23, various fund companies have reported ETF products one after another, competing to enter the market.
Data shows that the 10 China Securities A500 ETFs completed the reporting and approval before the release of the China Securities A500 Index, and started to be offered on September 10.
As of September 22, among the 10 fund managers participating in the first batch of China Securities A500 ETF issuance, products of Harvest Fund, J.P. Morgan Asset Management, Invesco Great Wall Fund, Southern Fund, Huatai-Pine Fund, Fullgoal Fund, and China Merchants Fund have completed the fundraising, and all have reached the initial fundraising limit of 2 billion yuan and triggered proportional allocation, injecting a total of 14 billion yuan of incremental funds into the market.
Among them, the Harvest China Securities A500 ETF has the shortest issuance time, only 4 days.
According to the announcement of the fund contract taking effect, the fund has 6,903 valid subscribers, and the fund manager subscribed to 2 billion yuan with its own funds during the fundraising period, accounting for 10% of the total fund shares.
The issuance time of the J.P. Morgan China Securities A500 ETF is 9 days.
There are three products in the issuance period.
According to the previously disclosed offering announcement, Taikang China Securities A500 ETF will end the fundraising on September 23; on September 24, Guotai Junan China Securities A500 ETF and Silver Hua China Securities A500 ETF will end the fundraising.
The first batch of 10 China Securities A500 ETFs will all end the fundraising this week, which will also bring new funds to the market.
It is worth mentioning that J.P. Morgan Asset Management, Silver Hua Fund, Huatai-Pine Fund, Harvest Fund, and Fullgoal Fund have also deployed China Securities A50 ETF products in the first quarter of this year.
The China Securities A50 Index is known as China's version of the "beautiful 50" index, which selects the 50 most outstanding stocks in A shares to form, and is considered to be the most representative of the core assets of A shares.
The China Securities A500 is considered to be a further expansion and extension of A50.
Broad-based ETFs are favored by institutions.
In recent years, the broad-based indices in the A-share market have become more and more abundant, and the concept of index-based investment has gradually taken root in people's hearts.
ETFs that track broad-based indices have been widely recognized by investors, such as CSI 300 ETF, SSE 50 ETF, China Securities 500 ETF, China Securities A50 ETF, etc.
Institutional funds such as social security, insurance funds, and pension funds have also started to deploy ETFs, and have recently appeared in the top ten holders of newly listed ETFs.
For example, the listing trading announcement issued by China Merchants CSI 300 ETF established on September 6 shows that among the 586 million shares of the fund, the proportion of shares held by institutional investors reached 77.91%.
Among the top ten holders, in addition to common institutions such as securities firms, there are also institutions such as enterprise annuity and occupational annuity plans.
The investment value of broad-based ETFs is becoming more and more prominent, and it is not ruled out that China Securities A500 ETFs will also be favored by institutions in the future.
Looking at the China Securities A50 ETFs established in the first half of this year, the first batch of China Securities A50 ETFs were issued and established in March, with an issuance scale of 800 million yuan to 2 billion yuan, and a total issuance scale of 16.5 billion yuan.
The fund mid-year report shows that as of the end of June this year, the asset size of the first batch of China Securities A50 ETFs has increased to 30.1 billion yuan, with a total increase of more than 82%.
Except for Harvest China Securities A50 ETF, the asset size of other A50 ETFs has achieved positive growth.
Investors who increase their holdings of A50 ETFs are mainly institutional investors.
The proportion of shares held by institutional investors in ICBC China Securities A50 ETF, Easy Fund China Securities A50 ETF, Huabao China Securities A50 ETF, and Dacheng China Securities A50 ETF is all above 90%, and the lowest proportion of shares held by institutional investors is also more than 65%.
From the trend of ETF scale changes in recent years, it can also be seen that the layout of institutional funds is mainly to configure high-quality broad-based indices, which will also be the key investment direction of mainstream funds in the future.