China’s first cross-border exchange-traded fund, based on the Nasdaq-100 Index, has begun trading on the Shanghai Stock Exchange.
The Guotai Nasdaq-100 Exchange-Traded Fund, sponsored by Guotai Asset Management, was created so that investors in China could easily invest in the largest and most liquid companies traded on The Nasdaq Stock Market. The listing of this product marks the first ETF in China to provide access to the US 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 a lengthy redemption process. The Guotai Nasdaq-100 Exchange-Traded Fund 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.
According to BlackRock, year-to-date inflows into Chinese equity ETPs increased 23.4 per cent to USD937.4bn.
“We applaud Guotai Asset Management for responding to increasing demand among all classes of investors in China for a cross-border ETF,” says Nasdaq OMX vice president Robert Hughes. “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.”