New | Vanguard to add China A-shares to emerging markets ETF

Vanguard Group said on Tuesday it plans to add onshore Chinese equities, known as A-shares, to its broad emerging markets exchange-traded fund, making it the first broad-based emerging markets ETF to gain direct exposure to the onshore market.

The Vanguard FTSE Emerging Markets ETF, which has some US$50 billion in assets and ranks among the biggest US-listed ETFs, will add the Chinese shares as a part of an expansion of several of Vanguard’s international index funds to broader FTSE benchmark indexes, the company said.

China’s so-called A-shares are the renminbi-denominated shares of companies incorporated in mainland China and traded on the Shanghai and Shenzhen exchanges. So far only a handful of US-listed China-focused ETFs have direct exposure to the A-shares market.

"The addition of China A-shares ... will provide investors with more complete exposure to a key emerging economy and the second-largest stock market in the world by market cap," Vanguard said, noting that China accounts for some 20 per cent of global trade and 7 per cent of global consumption.

Vanguard said it recently received a quota for China A-shares, which will provide exposure to the country’s largest issuers.

The Vanguard ETF change comes as the Vanguard Emerging Markets Stock Index Fund, of which the ETF is a share class, makes the benchmark change. China A-shares will represent 5.6 per cent of the new benchmark for the emerging markets index fund.