ETF red and black: the number of releases, the scale of the new high-rate battles
ETF red and black!
The number of issuances and the scale of fundraising are the highest in history, and the new economy e-line ETF has gone through a full 15 years.
On November 25, 2004, the China Securities 50 ETF issued a prospectus, the first time the public offering market dated passive investment.
On December 30 of the same year, the China Securities 50 ETF was officially announced, which is said to have opened the curtain of the Chinese ETF market.
From the perspective of development speed, since last year, the domestic ETF market has ushered in a golden period of rapid development.
Statistics show that as of November 11, 2019, there were 241 ETFs listed in the region, with a total market value of about 670 billion yuan.
In 2018, the number of ETFs newly established in the two years of 2019 accounted for 41% of the total number of 15%, and the total share of the issue has exceeded half of the total, reaching 52%.
Since this year, ETFs have maintained a rapid development trend, with fund shares increasing by more than 40% each year.
During the same period, the size of the Shanghai Stock Exchange’s ETF assets increased by 151.9 billion yuan compared with 2018, an increase of 30%.
In 2018, the size of the Shanghai Stock Exchange ETF increased by 44% over 2017, and its share surged by 93%.
Throughout 2018, the transaction size of various types of ETFs on the Shanghai Stock Exchange exceeded 7 trillion.
According to Ye Wu, deputy general manager of the Product Innovation Center of the Shanghai Stock Exchange,上海夜网论坛 at the 13th Index and Indexed Investment Forum on November 22, the Shanghai Stock ETF is divided into five categories.
Among them, there are more than 48 broad-based ETFs with a scale of more than 200 billion U.S. dollars. There are 43 ETFs in the industry category, covering nine major categories including financial real estate, raw materials, industry, consumption, medicine and health, information technology, and military industry.
In addition, the number of theme ETFs increased by 25, mainly including technology, 5G, central enterprise reform, the Yangtze River Delta, and the Bay Area; and there were 13 SmartBeta ETFs, including value, bonus, and low volatility.
In addition, enhanced ETFs are under development.
In fact, more and more competitors have joined in, and the “racetrack” in the domestic ETF market has become increasingly crowded.
In particular, the broad-based index ETF has become a starting product for fund companies to enter this field.
Behind the “short fight”, ETF product rate battles are going on.
The statistics of the newly added scale or over 200 billion yuan during the year show that as of November 21, 2019, the conversion of Penghua CSI 500 ETF was announced. Since this year, there have been 70 new ETF products of various types, and the scale of raising has reached nearly 160 billion yuan.Both the number of issues and the scale of raising have created the most public market history.
Among the 70 ETF products that have been established since this year, there are completely broad-based index products such as the Shanghai Stock Exchange 50 ETF, the China Securities 500 ETF, and the GEM ETF.State-owned enterprise innovation ETF, Nikkei 225 ETF, futures ETF and other featured products.
For example, during the year, 10 fund companies participated in the issuance of 21 industry-themed ETFs, mainly involving consumer, technology and other industries.
ETF industry and broad-based index coverage (as of 2019831) Zhao Wenrong, chief quantitative and allocation analyst at CITIC Securities Research, believes that “From the perspective of disk liquidity shocks, whether the average daily turnover reaches 30 million yuan is whether ETF trading is active.According to the scale of biology, there are currently nearly 50 active ETFs, and the ETF coverage market is relatively complete.
Among them, CSI 300, CSI 500, SSE 50, GEM Index, SSE 180, Shenzhen 100, GEM 50, SME Index and other core wide-base indexes all have active liquidity ETF coverage; non-bank finance, military industry, Pharmaceutical, consumer, banking, information technology, environmental protection, media and other large market value or highly volatile industry sectors also have active liquidity ETF coverage.
As of now, there are 28 funds with an ETF fund size of more than US $ 10 billion.
Except for currency-based ETFs, the two equity-based ETFs of the China Securities 500 ETF and the China Securities 50 ETF are more than 40 billion yuan in size. During the year, it is difficult to distinguish between them.
Among the industry ETFs, the industry ETFs of Cathay Pacific Funds have absolute advantages.
Among them, Cathay Securities China Securities Index ETF scale ranked first in the industry ETF, reaching 101.
At RMB 3.0 billion, Huabao CSI Leading Technology ETF and Rich Country CSI Leading Technology ETF were 65.
07 billion and 59.
The size of 4.3 billion ranked second and third.
The new economy e-line noted that the current momentum of ETF expansion is still continuing, and 20 products are currently in the recovery focus. They are expected to be established within the year.
Initially, it is generally expected that if calculated based on the average fundraising amount of newly established ETF products of US $ 2.3 billion this year, the total increase of ETFs in 2019 will reach another level, increasing the scale or exceeding the 200 billion mark.
An official and deputy general manager of the Shanghai Stock Exchange said at the ETF Summit “15 Years and 15 Cities” that there are currently more than 170 ETFs listed on the Shanghai Stock Exchange. The underlying assets include stocks, bonds, currencies, gold, and foreign assets.
Among them, the more influential cross-border ETFs include the S & P 500 ETF, the Nasdaq ETF, and the German DAX30 ETF.
Liu Ye disclosed that the Shanghai Stock Exchange will soon issue products based on British and French stocks and Japanese and Hong Kong products, which will better meet the diversified asset allocation needs of investors.
”This year, under the background that all circles are paying great attention to technological innovation, the Shanghai Stock Exchange and fund companies launched the technological ETF and 5GETF themed ETFs in a timely manner, effectively connecting the technological innovation industry.
“Liu Ying said.
In the next step, the Shanghai Stock Exchange will continue to expand the scope of ETF targets and improve the layout of ETFs. In the future, science and technology board ETFs may be launched.The SSE encourages fund companies to develop more industry ETFs, theme ETFs, cross-border ETFs and Smart Beta ETFs, study and launch enhanced ETFs and active ETFs, and explore cross-border interconnections with more markets.
At the same time, actively explore innovative products, such as commodity futures ETFs based on crude oil or copper, leveraged / reverse ETFs based on commodity futures contracts, foreign exchange ETFs and other innovative public offering funds.
In addition, the Shanghai Stock Exchange is researching and developing an ETF wealth management platform.
The ETF wealth management platform is a platform for banks, third-party sales institutions and other customers to directly invest in ETFs through the exchange without setting up a securities account, and provides market quotations and inquiry services to fund market makers to provide circulation for the market.neutral.
Excessive marketing detonated the effect, however, the new economy e-line noticed that behind the rapid development of the ETF market, some fund companies once exchanged major shareholders’ shares of listed companies for the growth of ETF scales, resulting in repeated redemptions.
In essence, the distortion effect brought by the excessive marketing of fund companies has also been detonated.
ETF redemption is understandable.
The so-called ETF exchange is a special ETF issuance method, that is, in the fundraising collection of ETF funds, the shareholders who hold the constituents of the fund will directly exchange their holdings for the fund shares.
Compared with the model of subscribing to fund shares with cash, the exchange method is to correct the constituents in exchange for fund units, which is equivalent to “exchanging goods for goods”, which is also a feature that other funds do not have.
In ETF redemption, the limit of redemption ratio is the core.
ETF funds track a certain underlying index. The weight of each constituent’s assets in the fund’s assets should be basically a fixed number.
If the conversion of ETF constituent stocks exceeds the composition ratio, causing the ETF fund assets to deviate from the underlying index, the fund manager will be forced to adjust positions, sell excess shares converted by major shareholders, and buy other constituent stocks of the target index.This will bring additional redemption risks.
For the major shareholders of listed companies, the ETFs they subscribe to will only cash out fund shares after listing, and the stocks will become cash, and a reduction of shares will be successfully completed.
In this case, ETFs can also be exempted from stamp duty in the secondary market. The transaction commission of ETFs is usually lower than the transaction commissions of stocks, and its holding costs are reduced.
But for ETF holders who use cash to subscribe, in addition to bearing the stamp duty and commission caused by the sale of excess redemption shares, they also face considerable impact costs, which is indeed unfair.
For example, Boshi Fund’s Boshi Central ETF is a typical example.
The fund was established on October 19, 2018 and has a size of 252.
US $ 2.2 billion, accounting for nearly 25% of the ETF issuance in 2018, but the operation has not been satisfactory for a year.
Investigating the reason, it may be the key that Boshi Fund accepts individual stocks with far more than the stock ratio.
According to PetroChina (601857.
(SH) 2018 annual report. On October 12, 2018, China National Petroleum Corporation totaled 11.
The 3.3 billion shares of the company subscribed for the ETF shares of the three companies including Boshi Fund, of which the Boshi centrally adjusted ETF received 4.
Subscription of 5.3 billion shares.
In the CSI Central Enterprise Structure Adjustment Index tracked by the three Central Enterprise Structure Adjustment ETFs, China Petroleum has a weight of 2.
87%, ranking the 8th largest weighted stock, but by the end of 2018, PetroChina accounted for 22% of the net asset value of the Yinhua Central Transfer ETF Fund.
During the same period, they accounted for 17% of the net asset value of Huaxia Central ETF and Boshi Central ETF respectively.
55% and 15.
As of November 22 this year, Boshi centrally adjusted the net value of ETFs to 0.
9,484 yuan, this year’s return investment 3.
66%, ranking 482 out of 509 funds of the same kind.
Its return since its establishment was -5.
Statistics show that although the third quarter of 2019 outperformed the performance comparison benchmark, the fund has not far outperformed the performance comparison benchmark since its establishment.
In fact, recently, the bad phenomenon of over-repurchasing ETFs and then reducing their holdings in disguise has been the focus of attention from regulators.
First, the regulatory authorities issued window guidance, and then the Shanghai and Shenzhen Stock Exchanges both stated that they would supervise the subscription of ETF stocks.
Specifically, the major shareholders of listed companies, and the shares used by certain shareholders to subscribe for ETF shares, are included in the reduction quota specified in the new rules for reducing holdings, that is, the shares paid by relevant shareholders to subscribe for ETF shares and their shares reduced through the secondary market.The combined calculation shall not exceed the amount of shares that can be reduced in the current period.
According to media reports, some public offering funds have been honored by regulators for their involvement in ETF redemption measures.
A public equity fund source said that several companies have been named in the recent meeting, saying that a distinction needs to be made.
In addition, it is understood that a large number of fund companies are required to return a lot of shares that have been exchanged for ETFs.
On the evening of November 19, Visual China (000681.
(SZ) announcement said that shareholders Chen Zhihua and Gao Wei decided to abandon their participation in the subscription of Penghua CSI 500 ETF fund shares by holding the shares of the company.
Data show that the weight of Vision China in the CSI 500 Index is only 0.
22%, according to the closing price of 21 on November 19.
Calculated at 58 yuan, the two shareholders need a total of 32.37 million yuan to exchange for 1.5 million shares.
According to the regulatory requirements, the shares purchased must not exceed the weight of the company’s shares in the index. Based on this calculation, the fundraising scale of Penghua CSI 500 ETF must be at least $ 14.7 billion to meet the redemption conditions.
Air Force, Cybernet Technology (300017.
SZ), Aviation Power (600893.
SH), four-dimensional map new (002405.
(SZ) All three companies announced that the shareholders of the company successively planned to abandon the subscription of Wells Fargo Technology 50ETF with the corresponding shares held, and shares of Wells Fargo China Securities Leading ETF.
”Tracks” are crowded to fight the rate war. Of course, asset size and liquidity are the “lifeblood” of ETF products.
Especially since the second half of this year, the ETF “race track” has become more crowded. In order to compete for market share, ETF products have begun to fight against rates.
Taking the Shanghai and Shenzhen 300 ETF as an example, wind data show that as of November 22, five fund companies that are issuing Shanghai and Shenzhen 300 ETF products have Taikang Assets, Tianhong, Minsheng Bank, Hua’an, and Huitianfu.
Among them, Huitianfu, Huaan, and Minsheng Banking Fund’s CSI 300 ETF products have exchanged the lowest current rate combination: 0.
15% management fee +0.
05% custody fee; Taikang Assets affiliated CSI 300 ETF management fee is also known as lower than the management fee rate of mainstream ETF products.
The Air Force, the launch of the National League Ann Shanghai and Shenzhen 300 ETF, which has been on sale on August 28, has been postponed for one day, and its release has just ended on November 19.
The management fee announced by the fund is zero.
3%, which is also lower than the stock ETF market.
5% average management fee.
The New Economy e-line statistics found that in addition to the six CSI 300 ETFs that have joined the rate war, among the existing 10 CSI 300 ETF stock products, E Fund CSI 300 ETF with the lowest rate is also “0.
15% management fee +0.
“05% custody fee” fee structure, ICBC CSI 300 ETF management fee reset to 0.
45%, while the eight public offerings of Huatai Borui Fund, Huaxia Fund, Harvest Fund and other CSI 300 ETFs remain at “0.”
5% management fee +0.
1% hosting fee “fee structure.
A research report by Shen Wanhongyuan on the upper limit of the average management fee rate of various types of funds pointed out that the overall gap between the current ETF issuers’ fee rates is not obvious, and the resulting fee rates can expand more market share.
Therefore, fund companies should put the reduction of fees in an important strategic position.
For example, the U.S. Pioneer Fund has the core advantage of low fees and is postponed to increase the market share in the United States.
Since the launch of the first ETF product in 2001, low rates have become its core competitiveness. At the end of 2017, the ETF scale was zero.
86 trillion US dollars, the CAGR of up to 35% in the past 10 years, the scale of the US ETF market has increased rapidly, from 7% to 26% in 2007-2017.
In addition, domestic ETF products are homogenized, and there has not yet been an absolute giant in passive management.
Judging from the development experience of the US ETF, the rich and comprehensive product lineup is laid out in advance, and the ETF fund’s first-mover advantage is significant.
For example, the BlackRock Fund developed the iShares brand after acquiring BGI in 2009, which seems to be the king of ETF today.
The United States and overseas dual-owned companies currently have a total of ETF products deployed in major global capital markets. At present, the total size of ETFs is 2 trillion U.S. dollars, which is twice that of Pioneer and three times that of State Street.
It is reported that BlackRock Fund provides ETF products covering all asset classes.
Among them, the iShares core series product asset increase average rate is only less than 0.
7 ‰, which provides investors with great purchasing convenience. In general, the company actively deploys Smart Beta products, which cost 4 times the company’s core series products, which is also higher than the industry average.
It is worth noting that the rates of U.S. index funds and ETF fund products have continued to decline significantly, and some companies have even launched zero-rate products. The essence of the price war is that companies have increased the number of customers by increasing the number of customers and AUMs.Rates, and more through the provision of consulting services and other diversified services.
For example, Vanguard Fund and BlackRock Fund have alternative service capabilities in investment consulting or risk management.
The original sources said that in the long run, the domestic ETF product rates still have room for downward adjustment.
From the overseas situation, the eligibility rate of Pioneer Fund-affiliated ETF products is generally 0.
At 04%, the Eligible Yield of the BlackRock Fund ETF is generally 0.
In terms of products, the products with the lowest rates are basically S & P 500 ETFs, but there are also individual products that set off rate wars, such as the Russell 1000 ETF.
Therefore, domestic ETF product rates still have room to reduce.
However, in addition, the staff of the public quantification department said that at present there are no conditions for the expansion of the domestic stock market to reduce the ETF management fee rate. Some innovative products or key marketing products may participate in fund sales and reduce the rate. This market still needs to be protected.Form a situation of vicious competition.
It is expected that the company to the right of ETF products will become the main force to continue to promote the rate war.
Considering that the scale of ETF products exceeds the break-even point, their marginal costs will decrease. Such fund companies will have ample room to fight the rate war, thereby expanding the weak competitors into the market and thus their hegemony.