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Actively-managed ETFs, inverse ETFs and leveraged ETFs will be the goal of innovation in future.
China Securities Index Co., Ltd. (CSI) held the 4th Index and Indexation Investment Forum in Shanghai on November 15, where experts made in-depth discussion on the topic of "indexation investment in the backdrop of financial innovation" and agreed that the indexation investment in China is facing a great development opportunity, with actively-managed ETFs, inverse ETFs, leveraged ETFs and long/short strategic ETFs being the main goal of ETF innovation in future.
Delivering keynote speeches at the forum were Tong Daochi, Director of International Cooperation Department of the China Securities Regulatory Commission, Fang Xinghai, Director of the Shanghai Financial Service Office, Zhou Qinye, Vice President of the Shanghai Stock Exchange, and Zhou Jiannan, Assistant to President of the Shenzhen Stock Exchange.
The past two years witnessed the unprecedented development and innovation of index products, particularly ETF products, on the capital market in China's mainland. The year of 2009 was nicknamed "The Year of Index Fund" as the number of index products introduced to the public went beyond the total in the past seven years. Among the 29 index products, four were ETFs. The upsurge of indexation investment is gaining momentum this year. By November 12, 10 out of 38 issued index products had been ETFs, indicating a dramatic rise in proportion.
Besides, the types of index products are diversified as thematic index funds, strategic index funds, thematic ETFs, strategic ETFs and other new products vie to make their debuts. By the end of October, there had been 79 index products (including 53 index funds) as well as 15 ETFs and 11 feeder funds, boasting net asset values of about RMB240 billion and RMB80 billion, respectively. The number of index products had accounted for about 12% of that of all mutual funds, with the net asset values accounting for about 13% of that of the total.
Financial system innovation provides a favorable environment for further development of indexation investment. Strategic indices based on quantitative strategy and derivatives are prevalent, while actively-managed ETFs, inverse ETFs, leveraged ETFs and long/short strategic ETFs are becoming the main goals of ETF innovation in the days to come. The introduction of ETF options and warrants and other derivatives in future will in turn boost the growth of ETFs.
