New | China's CSOP launches ETF tracking Shenzhen's ChiNext index

Chinese asset management firm CSOP Asset Management launched the first renminbi exchange-traded fund (ETF) tracking Shenzhen’s ChiNext index on Friday, providing foreign investors with a new channel to diversify their portfolios.

The fund that invests in the 100 biggest companies listed on the ChiNext in terms of market value, or 47 per cent of the total, makes use of CSOP’s Renminbi Qualified Foreign Institutional Investors (RQFII) quota.

Before this fund, most RQFII ETFs track major stock indices in China’s equity market, such as CSOP A50 ETF which follows the 50 biggest blue chip companies and China AMC CSI300 ETF that follows the 300 largest and most liquid stocks in China.

"Asset allocation demand has become more complicated, as investors are not content with having access to China, but hope to secure returns from more balanced asset categories," said Jack Wang, head of institutional clients at CSOP Asset Management.

Wang believes this fund will see demand from both long-only funds that want to have more exposure to China as well as investors who are interested in shorting the ChiNext index which has more than doubled so far this year.

The Nasdaq-style ChiNext, a high-growth enterprise board, has consistently outperformed the Shanghai Exchange which has concentrated on listing large-cap blue chip firms in recent years.