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Public fund Red Sea Breakout Index Enhanced ETF targets excess returns

March 14, 2019 00:39
source: First finance
edit:Eastern Fortune Network

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[Public fund red sea breakout index-enhanced ETF targeting excess returns] As the number and size of broad-based ETFs (transactional open-end index funds) are becoming saturated, the public fund product R&D department has begun to focus on ETF product innovation. Recently, China Merchants and Cathay Pacific Fund reported a total of five index-enhanced ETF products. The China Merchants Fund submitted the materials of the CSI 300 and CSI 500 Index ETFs on March 1, and the Guotai Fund submitted 3 on March 8. Only products, more than the investment, reported a SSE 50 enhanced ETF. (First Finance)

With wide baseETFTransactional open indexfundThe number and scale of products are becoming saturated, and the R&D department of public fund products has begun to focus on ETF product innovation.

Recently, investment andGuotai FundA total of 5 index-enhanced ETF products were reported, among whichChina Merchants FundSubmitted on March 1stShanghai and Shenzhen 300And CSI 500 two index enhanced ETF materials, March 8 Guotai Fund submitted 3 products, more than 1 reportedSSE 50Enhance ETFs.

The First Financial reporter learned that although China Merchants and Cathay Pacific's index-enhanced ETFs were considered to be the first batch of enhanced ETFs, in fact, in August last year, Huatai Bairui had a similar declaration.

The "2019 Fund Recruitment Application Form (as of March 1, 2019)" disclosed by the official website of the China Securities Regulatory Commission shows that on August 13, 2018, Huatai Bairui will apply for the change of the SSE Small and Medium-sized Open Index Fund. This is the “CSI 1000 Quantitative and Enhanced Trading Open Index Fund”. Strictly speaking, this is the first ETF enhancement product reported. At the same time, the CSI 1000 quantitative enhancement ETF connection fund was applied for change. Both products were accepted on October 10 of that year.

Su Yanqing, manager of TMT50 ETF Fund, said that he is optimistic about the prospects of index-enhanced ETFs. First, at present, there is still a high winning rate in the overall performance of the index enhancement strategy in China. Second, the operating mechanism of the ETF fund itself is mature and transparent. Conducive to investor investment, index-enhanced ETF products are products that meet the needs of investors.

  ETF marketThe road to innovation under saturation

Since 2018, the hottest “explosive items” of public funds have been ETFs.

Among them, especially the wide-based ETF products are the most popular. Earlier, despite the poor stock market, ETF products continued to grow against the trend. The data shows that as of March 13th, there were 10 ETFs with a scale of more than 10 billion yuan. Except for the two central enterprises' structural adjustment ETFs, all of them are tracking the mainstream broad bases such as SSE 50, CSI 300, CSI 500 and GEM. Index products.

For example, the number one Huaxia SSE 50ETF has reached the latest size of 45.79 billion yuan. The South China CSI 500 ETF and the Huatai Berry CSI 300 ETF are all over 33 billion yuan. The China Shanghai-Shenzhen 300 ETF, the Harvest Shanghai-Shenzhen 300 ETF, the E Fund, and the ETF. Huaan SSE 180 ETF, ICBC SSE 50 ETF, etc. are all members of the ETF “Billion Club”.

The rapid growth of ETF has attracted majorfund companyStrengthen the layout of ETF products, especially wide-band ETFs. According to the data, from the first listing of the China SSE 50 ETF products in 2005, a total of 109 ETF products were launched in the 13 years from 2005 to 2017, and from the beginning of 2018, as many as 34 ETFs were launched in more than one year. .

From the product point of view, the fund companies that had previously laid out ETFs were mainly “preempting the market”, and the product line was mainly based on layout-based ETFs. Fund companies with existing ETF products further strengthened the layout of ETFs of different themes. In the fierce competition, index-enhanced ETFs came into being.

Su Yanqing told reporters that China Merchants Fund's quantitative products are characterized by a distinctive index and a refined layout. Most of the tracking index is scarce in the industry. The purpose of this first enhanced ETF is to provide investors with more subdivided asset allocation tools while avoiding Product homogenization competition, maintaining its innovative advantages in the field of index funds.

The head of the index department of a medium-sized public fund in Shenzhen said: "The ordinary index ETF is already a red sea, and it is necessary to make a difference in the future. The index-enhanced ETF is not a mainstream product, it should be a small one."

Another Shenzhen fund-raising initiative quantitative product fund manager said that the market began to do ETF last year. In the long run, everyone wants to "eat crabs" to make innovations. This represents the long-term direction of public offerings. In addition, after a certain period of time to cultivate ETF products, and the market is getting better, such innovative products may be better.

  Three advantages of index-enhanced ETFs

For the emergence of innovative products of public funds, the market is most concerned about the advantages of new products.

Taking the products of China Merchants Fund as an example, Su Yanqing said that the index-enhanced ETF is a combination of active management and ETF operation mode. Different from the traditional wide-based ETF and SmartBeta ETF, it is aimed at tracking a specific index. Enhanced ETF To win the excess return as the investment target by winning the index.

“SmartBeta ETF is also the pursuit of excess returns beyond the broad-based index, but it has fixed its investment strategy through an index of transparent quantitative methods. In contrast, index-enhanced ETFs are more flexible in their investment strategies. It is not easy to be followed by market tracking. In the subsequent investment, the enhanced ETF is expected to increase the income for the traditional broad-based index, obtain excess returns beyond the market average, and also flexibly choose the investment style according to market changes.” Su Yanqing further said.

With the active management part, the index-enhanced ETF needs to make a difference and advantage in terms of strategy compared to the ordinary index ETF. Su Yanqing said that the enhancement strategy mainly adopts the multi-factor enhancement model. Based on the historical data of the underlying index constituent stocks and other stocks, the statistical analysis of the impact of various factors on the performance of individual stocks in different market environments is conducted to find possible influences. The factor of stock return.

A public fundraising investment manager in Beijing also said that from the perspective of investment, the ordinary index enhancement and ETF enhancement are the same, the difference is in the product design mechanism. "Investment is to strengthen the benchmark index, the difference is that one can be listed and traded, one is not. The other is the difference in the design of the redemption."

A person familiar with index-enhanced ETF products specifically stated that this product has three major advantages: first, the transaction is more convenient, second, the rate is relatively lower, and third, the active management part is more transparent. “Index-enhanced ETFs are listed and traded and can be subscribed, purchased, redeemed, traded on-site, and are more efficient and less expensive than off-market active quantitative enhancement products. Compared to ordinary indices The enhanced fund, its active management part is more transparent, a large probability will be transferred once a month, the ordinary off-exchange fund will only publish a quarterly report in a quarter to see the change in positions."

The First Financial Reporter learned that China Merchants Fund has set the product management fee rate to five thousandths. "Now we are reporting an ETF rate of almost two-thousandths, but because of this active management, the management fee is slightly higher. But compared with the current mainstream ETF, the rate is still low, Wind. The data shows that the average management fee rate of the ETF market is 0.58%." The aforementioned China Merchants Fund said.

“The market for ETFs is a winner, and the homogenization phenomenon is serious. If the same products are reissued, they are not competitive with the previous products, especially the leading products.” The aforementioned Beijing public fundraising investment department chief said.

He further stated that “the current fund companies push index-enhanced ETFs are also based on two considerations. On the one hand, ETFs are more successful products; on the other hand, index enhancement is also a successful product, then these fund companies consider combining the two. Make a difference, make a first-mover advantage in an innovative way, and stand out in the same product."

In the opinion of the industry, both China Merchants and Cathay Pacific are companies with a wide distribution index. They are also highly sensitive to the index business and have a certain foundation in product innovation.

“Every family has their own things, and their strategies are also confidential. I think new products may be related to their own strategies for enhancing products or active products.” The aforementioned Shenzhen public funded active quantitative product fund manager said.

Wind statistics show that Guotai Fund currently has 141 products (ABC share is calculated separately), the number of index funds is 28; China Merchants Fund currently has 241 products (ABC share is calculated separately), the number of index funds is 44; China Merchants Fund currently has 6 enhanced index funds.

(Article source: First Finance)

                                (Editor: DF314)


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