Since the inception of the first stock ETF in 2005, it took 18 years for its scale to grow from zero to 1 trillion yuan, and only two years to double to 2 trillion yuan, which is no easy feat for A-shares.

The successful fundraising of the 10 CSI A500 ETFs has once again demonstrated the market's recognition of ETFs as an investment tool.

According to data from Eastmoney Choice, as of September 23, there are already 316 stock ETFs (corresponding to 316 indices), with 16 new additions in 2024. The total fundraising for these new varieties amounts to 43.8 billion yuan, of which, the CSI A50 ETF and CSI A500 ETF raised a combined total of 36.5 billion yuan, accounting for 83.33%.

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At the same time, the variety of cross-border ETFs is becoming increasingly rich. Since 2024, there have been 8 new additions, with a total fundraising of 6.5 billion yuan. Among them, the two ETFs tracking the China New Hong Kong Stock Connect Central Enterprise Dividend Index and the FTSE Arab Index have a more noticeable "money-attracting effect," raising 3.4 billion yuan and 1.2 billion yuan respectively, accounting for 52.31% and 18.46%.

Behind these new ETF varieties is the guidance of regulatory authorities, as well as the grasp of market opportunities by index compilers and public funds.

It is under the guidance of regulatory authorities that the participation of medium and long-term funds in ETFs has significantly increased. This is the conclusion of the "ETF Investment and Trading White Paper" released by the Shanghai Stock Exchange on September 13. According to the "White Paper," the participation of these funds "not only introduces incremental funds to the ETF market but also effectively drives the improvement of market liquidity."

To some extent, it is precisely because of the inflow of medium and long-term funds that the scale of stock ETFs has finally reached a new level of 2 trillion yuan. Looking at historical data, since the first stock ETF appeared in 2005, it took 18 years for its scale to grow from zero to 1 trillion yuan, and only two years to double to 2 trillion yuan, which is not easy for A-shares.

On September 24, China Securities Regulatory Commission Chairman Wu Qing said at a press conference held by the State Council Information Office: "Next, we will further optimize the registration of equity fund products, vigorously promote the innovation of broad-based ETF and other index-based products, and introduce more small and medium-sized ETF fund products, including ChiNext and STAR Market, in a timely manner, to better serve investors and the national strategy, as well as the development of new quality productive forces."

According to the data provided by Wu Qing, as of the end of August 2024, professional institutional investors such as equity public funds, insurance funds, and various pension funds held a total of nearly 15 trillion yuan in A-share circulating market value, more than doubling from the beginning of 2019, and the proportion of A-share circulating market value increased from 17% to 22.2%.

Behind the hot sale of A500 ETFsThe recent strong sales of the A500 ETF is a continuation of the significant development of ETFs over the past two years.

According to information from the official website of the China Securities Regulatory Commission (CSRC), on September 5th, 10 public fund institutions, including Fullgoal, Harvest, Huatai-PineBridge, Morgan, and Silver Hua, simultaneously filed for this product. They were all approved the next day and issued on September 10th.

Interestingly, although the China Securities Index Co., Ltd. announced the "Compilation Plan" and the list of constituent stocks of the CSI A500 Index on August 27th, the official release date of the index was September 23rd. This means that the filing and issuance of the CSI A500 ETF actually took a step ahead.

However, this does not affect investors' enthusiasm for this product.

From the announcements issued by the aforementioned public fund institutions, 6 products concluded their fundraising ahead of schedule, and all 10 products reached the maximum initial fundraising scale of 2 billion yuan. In other words, the total initial fundraising scale of the 10 products was 20 billion yuan.

Among them, the Harvest CSI A500 ETF was established on September 20th. According to its "Contract Effectiveness Announcement," Harvest Fund subscribed to 200 million shares with its own funds, accounting for 10% of the initial fundraising scale. According to relevant regulations of the CSRC, when public fund institutions subscribe to their own products with their own funds, the holding period is not less than 6 months.

The reason why the CSI A500 ETF is sought after by investors is not only because the valuation level of A-shares is at a historically low position but also because of the characteristics of the CSI A500 Index itself.

According to the description on the official website of the China Securities Index, the compilation method of this index focuses on industry balance, comprehensively depicting the industry structure characteristics of the A-share market, while including more emerging industry leading companies, timely reflecting the transformation of the industrial structure, and having a high coverage rate, covering about 56.00% of the market value and free float market value of A-shares, but the weight is relatively dispersed, with the total weight of the top 10 samples and the top 20 samples being 21.00% and 30.40%, respectively. In addition, "the index compilation combines the screening conditions of interconnectivity and ESG, facilitating the allocation of A-share assets by domestic and foreign long-term funds."

Data shows that as of September 23rd, among the 11 constituent industries covered by the CSI A500 Index, the weights of the industrial, information technology, communication services, and health care industries are 22.08%, 13.08%, 5.83%, and 7.73%, respectively, totaling 48.72%. At the same time, among the 500 constituent stocks, there are 337 with a market value of less than 50 billion yuan, 162 with a market value of less than 20 billion yuan, and even 29 with a market value of less than 10 billion yuan.

A wide variety of new products have been added.The successful launch of the CSI A500 ETF has further enriched the variety of stock ETFs. According to data from Eastmoney Choice, as of September 23, there were 789 stock ETFs in the market, with a total scale of 2.03 trillion yuan, an increase of 40.44% compared to the beginning of the year. Among them, the scale of broad-based index ETFs (also known as large-cap index ETFs) increased from 847 billion yuan at the beginning of the year to 1.52 trillion yuan, an increase of 79.25%.

In terms of types, there are a total of 316 stock ETFs (corresponding to 316 indices), of which 16 are newly added in 2024, such as CSI A500 ETF, CSI A50 ETF, Central Enterprise Science and Technology Innovation ETF, Shanghai State-owned Dividend ETF, Oil and Gas Resources ETF, Entrepreneurship Growth ETF, Auto Parts ETF, etc.

Regarding the 16 newly added stock ETFs in 2024, the CSI A500 ETF has the largest issuance scale, followed by the CSI A50 ETF. Data shows that there are also a total of 10 CSI A50 ETFs, all established in March 2024, with a total issuance scale of 16.5 billion yuan. As of September 23, the total scale of these 10 products is 31.1 billion yuan, an increase of 88.48% compared to the issuance scale.

The public funds that have established the CSI A50 ETF include Yifangda, ICBC Rongxin, and 10 others. Among them, 5 companies including Fu Guo, Jiashi, Huatai Baoli, Morgan, and Yinhua have both A50 ETF and A500 ETF.

The third-largest issuance scale is the Central Enterprise Science and Technology Innovation ETF. This product tracks the Central Enterprise Science and Technology Innovation Index, and currently, there is only one product, established by Rongtong Fund in August with an issuance scale of 1.785 billion yuan. As of September 23, its net asset value is 1.233 billion yuan.

It is worth mentioning that the Central Enterprise Science and Technology Innovation Index is a customized index by China Chengtong Group to the CSI Index Company. China Chengtong Group holds 98.24% of the shares of Chengtong Securities Co., Ltd., which in turn is the controlling shareholder of Rongtong Fund with a 60% stake.

Among the other 13 newly added stock ETFs, in addition to the Shenzhen Main Board 50 ETF tracking a broad-based index, most of them track thematic indices, industry indices, or strategy indices, such as the Shanghai State-owned Enterprise Dividend Index, Auto Parts Index, Oil and Gas Resources Index, High Dividend Strategy Index, etc. Among them, except for the Dividend State-owned ETF tracking the Shanghai State-owned Enterprise Dividend Index, which has seen an increase in the latest scale compared to its establishment, the others have all shrunk to varying degrees.

The variety of cross-border ETFs is also becoming richer. As of September 23, there are 130 such ETFs, with a total scale of 341.3 billion yuan, an increase of 22.26% compared to the beginning of the year.These cross-border ETFs come in 39 varieties, with 8 new additions in 2024, such as the Saudi ETF, Dow Jones ETF, Guoxin Hong Kong Stock Connect Central Enterprises Dividend ETF, and S&P Consumer ETF, which track indices like the FTSE Arabia Index, Dow Jones Industrial Average, Guoxin Hong Kong Stock Connect Central Enterprises Dividend Index, and the S&P 500 Consumer Select Index, among others.

From the perspective of holder structure, as of the end of the first half of the year, institutional investors held a combined share scale of 973.4 billion units in stock ETFs and cross-border ETFs, accounting for 48.31% of the share scale of these two major categories of ETFs, an increase of 4.05 percentage points from the beginning of the year.

As for the proportion of shares held by institutional investors that are held by medium and long-term funds, there is currently no exact official data. According to the Shanghai Stock Exchange's "ETF Investment and Trading White Paper": "With the continuous enrichment of product layout and the continuous optimization of supporting mechanisms, ETFs have increasingly become a high-quality tool for investors' asset allocation, the participation of medium and long-term funds has significantly increased, and a positive market ecosystem has gradually taken shape."

Institutional competition is fierce.

The competition among public institutions around the layout and investment of ETFs is also becoming more intense.

According to the data from East Money Choice, as of September 23, there are 51 public institutions that have established stock ETFs, an increase of 1 compared to 2023.

The new addition is HaiFuTong. In March 2024, this veteran institution, established in 2003, finally established its first stock ETF, the HaiFuTong 2000 ETF Enhanced. Subsequently, in April, it established an auto parts ETF. As of September 23, the combined net asset value of these two ETFs is 74 million yuan.

Although the scale is not large, it has enriched the category of HaiFuTong ETFs, making it the 23rd public institution to simultaneously layout stock ETFs and cross-border ETFs. Before this, the institution only had 1 cross-border ETF, namely HaiFuTong Hong Kong Stock Connect Technology ETF, with a net asset value of 673 million yuan as of September 23. If stock ETFs are included, the combined scale of the two major equity ETFs under HaiFuTong is 747 million yuan.

WanJia Fund established its first cross-border ETF in August this year, namely WanJia Hong Kong Stock Connect Central Enterprises Dividend ETF, making it the 24th public institution to simultaneously layout the two major equity ETFs. As of September 23, the net asset value of WanJia Hong Kong Stock Connect Central Enterprises Dividend ETF is 222 million yuan. If stock ETFs are included, the combined scale of the two major equity ETFs under WanJia is 5.398 billion yuan.

Choice data shows that as of September 23, the top three public institutions in terms of the increase in the two major equity ETFs since 2024 are Yifangda, Huatai Baorui, and Huaxia Fund, with increases of 184.6 billion yuan, 160.5 billion yuan, and 115.1 billion yuan, respectively, with growth rates of 72.67%, 82.28%, and 28.84%, respectively.