Broad-based ETFs on the Rise as RMB 300 Billion Flowed into Passive Investing

GUANGZHOU, China, Aug. 21, 2023 /PRNewswire/ -- Despite the market volatility this year, there remained a core foundation of inflows into equity ETFs. So far this year, equity ETFs took in more than RMB 300 billion (USD 41.4 billion), according to China Galaxy Research Institute.

Investors are piling huge amounts of capital into equity ETFs during market decline, while May, June, and July each recorded a net inflow of RMB 75 billion (USD 10.3 billion), RMB 55 billion (USD 7.6 billion), and RMB 61 billion (USD 8.4 billion) respectively, all at historical highs. This prevailing trend has continued as data showed that equity ETFs drew RMB 79 billion (USD 10.9 billion) in the month to August 15th. On August 7th, the daily inflow surpassed RMB 10 billion (USD 1.4 billion) and remained at the similar level for the next two days.

Specifically, broad-based strategies attracted the biggest influx of investment with CSI 300 index, STAR 50 index, and ChiNext index topping the year-to-date inflow lists with net inflows of RMB 51 billion (USD 7 billion), RMB 46 billion (USD 6.3 billion), and RMB 28 billion (USD 3.9 billion) respectively, according to Wind data. In terms of individual ETFs, four E Fund offerings, consisting of three broad-based ETFs -- E Fund ChiNext ETF, E Fund SSE Star 50 ETF, E Fund CSI 300 ETF – and E Fund CSI 300 Health Care Index ETF, ranked in the top 10 ETFs by net inflow.

There are now more than 100 broad-based ETFs, which have garnered more than RMB 64 billion (USD 8.8 billion), contributing to over 80% of all equity ETF net inflows in August. In addition, eight broad-based ETFs are among the top ten ETF products by net inflow.

Strong flows into broad-based ETFs suggest that investors' interest in stocks remained resilient. Moreover, the stock valuations have fallen substantially, offering reasonably attractive opportunities. The trailing P/E ratio of CSI All Share was 16.5, at the three-year 19th percentile line and ten-year 34th percentile line, according to data from Wind.

Industry insiders expected that market valuations would hit an inflection point given the adequate market correction and the possibility that political incentives could stimulate a resurgence in investor confidence and risk appetite.

About E Fund Management

Established in 2001, E Fund Management Co., Ltd. ("E Fund") is a leading comprehensive fund manager in China with close to RMB 3 trillion (USD 414 billion) under management. 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. Long-term oriented, it has been focusing on the investment management business since inception and believes in the power of in-depth research and time in investing. It is widely recognized as one of the most trusted and outstanding Chinese asset managers.

Source: E Fund Management