E Fund Management’s CES China 120 Index ETF, the world's first cross-market RQFII ETF concurrently tracing A-shares, H-shares, red chips and mainland China's private enterprises, has listed on HKEx.
E Fund CES 120 ETF is a passively managed ETF that fully replicates and invests all of its assets proportionately in the 120 stocks underlying the CES China 120 Index.
E Fund CES 120 ETF minimises tracking error and fully mirrors the stock index futures (China 120 Futures) to offer efficient hedging strategies against position-related risks. The investment objective is to offer investment return (before fees and expenses) that closely corresponds to the performance of China 120. China 120 consists of 80 largest and most liquid A-Shares in terms of market value trading on the Shanghai and Shenzhen stock exchanges, as well as the 40 largest and most liquid SEHK-listed stocks of mainland companies in terms of market value listed on SEHK.
It is the first cross-border ETF to express the "Greater China" concept, potentially boosting the cooperation of stock exchanges in Hong Kong and mainland markets. At present there are eight RQFII-ETFs in Hong Kong market, all of which only invest in A-shares. Similarly, all of the cross-border ETFs in mainland market now only invest in H-shares.
As the first ETF to invest in both mainland and Hong Kong market, E Fund CES 120 ETF not only resolve issues caused by the different clearing systems in A-share and H-share markets, but also works out the exchange problem for investors holding both RMB and HKD currencies.
The ETF captures many stocks which are out of reach for mainland investors, such as Tencent, China Mobile Limited, Great Wall Motor Company Limited, and Belle International Holdings Limited.
It also provides investment opportunities of many historic bull stocks that are not available for Hong Kong investors, such as Suning Commerce Group, Gree Electric Appliances, Yunnabaiyao, and Vanke A.