Broad-based ETFs Benefit from Resilient Chinese Fundamentals and Rising Risk Appetite
GUANGZHOU, China, Sept. 23, 2024 /PRNewswire/ -- On September 18th, the Fed lowered its benchmark policy rate by 50 basis points, bringing it down to a range of 4.75% to 5%. This move in US interest rates could boost international investors' risk appetite for Asian stocks. Meanwhile, the fundamentals of the Chinese economy remained resilient. According to China Association for Public Companies, more than 5,300 A-share listed companies have released semi-annual reports for 2024, as of August 31st. Among them, over 3,000 companies saw a year-on-year increase in revenue and over 4,100 firms reported positive net profit, accounting for 78%.
In addition to improving earnings results, Chinese companies demonstrated a great commitment to sharing profits with shareholders in response to the regulations urging for enhanced consistency and predictability in dividend distributions, increased dividend payout ratios, and multiple dividends. China Association for Public Companies also revealed that the number of companies planning for interim dividends has increased significantly -- over 600 companies have announced potential interim dividends this year compared to less than 200 companies in 2023.
Well poised to capture this trend, broad-based indexes have continued to draw significant attention from investors and recorded net inflows of approximately US$ 100 billion for the first eight months of this year. As the largest mutual fund manager in China, E Fund Management ("E Fund") was one of the major beneficiaries with its comprehensive ETF portfolio, which consists of 21 broad-based ETFs tracking performance of small-caps to mega-caps, including E Fund CSI 300 ETF (Code: 510310) and MSCI China A50 Connect ETF (Code: 563000).
By employing a sophisticated blend of various strategies and rigorous risk monitoring, E Fund was able to achieve excess returns while ensuring desirable tracking error for its ETF products. As of September 19th, E Fund CSI 300 ETF managed to deliver a 2.33% excess return while keeping annualized tracking error around 0.45% in the past year, better than the average [1] of 2.07% excess return and 0.46% annualized tracking error.
About E Fund
Established in 2001, E Fund Management Co., Ltd. ("E Fund") is a leading comprehensive mutual fund manager in China with close to RMB 3.3 trillion (US$ 454 billion) under management [2]. It offers investment solutions to onshore and offshore clients, helping clients achieve long-term sustainable investment performances. E Fund's clients include both individuals and institutions, ranging from central banks, sovereign wealth funds, social security funds, pension funds, insurance and reinsurance companies, to corporates and banks. It is a pioneer and leading practitioner in responsible investments in China and is widely recognized as one of the most trusted and outstanding Chinese asset managers.
Note:
[1] "Average" refers to ETFs which track CSI 300 Index and each amounts over RMB 5 billion
[2] As at Jun 30, 2024. AuM includes subsidiaries. Source: PBoC, Wind.
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