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Our reporter Tian Peng and intern Li Haoxuan

Recently, the Shenzhen Stock Exchange (hereinafter referred to as "SZSE") released the White Paper on the Development of the ETF Market (hereinafter referred to as the "White Paper"). The White Paper shows that as of the end of June 2024, there are 946 non-monetary ETFs in China, with an asset size exceeding 2 trillion yuan, and both the number of products and the asset size have reached new highs. The total size of domestic ETFs ranks sixth in the world, and the number of "100 billion yuan" broad-based ETF products has expanded to 4.

Looking ahead, the White Paper states that the development of my country's ETF market will further increase the layout of equity ETFs around new productivity. At the same time, the ETF product series will continue to expand, and the research and development of innovative products such as actively managed ETFs, REITs ETFs, commodity futures ETFs, derivative strategy ETFs, and multi-asset ETFs are expected to continue to advance, providing the market with more types of investment tools. In addition, the domestic market will continue to strengthen multi-field cooperation with overseas exchanges and market institutions, continuously optimize the cross-border product system, and expand cross-border investment and financing channels.

Overall growth trend

Since the beginning of this year, as the advantages of passive investment have gradually become more prominent, the scale of ETFs has further increased, reaching a record high. Data shows that as of the end of June 2024, there were 973 domestic ETFs with a total scale of 2.47 trillion yuan. Among them, the number of ETF (non-monetary) products in Shenzhen and Shanghai was 946, a net increase of 76 from the end of 2023, with a total asset scale of 2.29 trillion yuan, an increase of 442.3 billion yuan from the end of 2023.

Among them, the increase in ETF scale in the first half of 2024 mainly comes from the growth of the scale of existing ETFs. Data shows that in the first half of this year, the scale of existing ETFs increased by 395.9 billion yuan, accounting for 89.50%, and the scale of newly issued ETFs was 46.4 billion yuan, contributing 10.50% of the scale increase.

In-depth observations revealed that the scale of various types of stock products has changed differently, and broad-based products are the "main force" in the growth of stock product scale. In the first half of 2024, the scale of broad-based ETFs increased by 373.1 billion yuan, accounting for 94.29% of the new scale of stock ETFs. There are 447 industry-themed ETFs, and the scale has decreased by 74 billion yuan. The scale of strategy ETFs, bond ETFs, cross-border ETFs and commodity ETFs has increased slightly.

In addition, ETF-linked funds are heating up, with the number of products reaching new heights. The White Paper shows that by the end of June 2024, there will be 580 ETF-linked funds in the market, with a total size of 402.2 billion yuan, an increase of 17.9 billion yuan from the end of 2023. In the first half of 2024, there were 97 newly established ETF-linked funds, with a total new issuance size of 7 billion yuan.

Different types of hot and cold

Overall, in the first half of 2024, the scale of my country's ETFs further grew, reaching a historical high; specifically, the development of ETFs such as broad-based ETFs, cross-border ETFs, dividend ETFs, bond ETFs, and commodity ETFs was uneven.

From the perspective of broad-based ETFs, the total scale of broad-based ETFs has exceeded one trillion yuan, and the stock scale has increased significantly. Data shows that by the end of June 2024, the number of broad-based ETFs reached 232, with a total scale of 1.25 trillion yuan, an increase of 405.6 billion yuan from the end of 2023, an increase of 48.13%.

From the perspective of industry-themed ETFs, their scale is showing a downward trend, with technology and medicine categories shrinking more. As of the end of June 2024, there are 485 industry-themed ETFs with a total scale of 487.7 billion yuan. Affected by market volatility adjustments, the scale of industry-themed ETFs has decreased by 70.2 billion yuan compared with the end of 2023.

From the perspective of cross-border ETFs, the scale of cross-border ETFs continues to grow due to the increase in overseas investment demand. Driven by overseas investment demand, the types of cross-border ETF products are becoming more and more complete, covering the United States, Hong Kong, Japan, Germany, France, Southeast Asia, etc., forming a product layout dominated by broad-based, high-tech, and new economy, and becoming an important tool for investors to layout overseas markets. As of the end of June 2024, there were 126 cross-border ETFs with a total scale of 311.1 billion yuan, an increase of 31.1 billion yuan from the end of 2023, an increase of 11.11%.

From the perspective of strategic ETFs, their scale has grown significantly, with dividend ETFs being the most prominent. As of the end of June 2024, there were 71 strategic ETFs with a total scale of 77.4 billion yuan, an increase of 23.5 billion yuan or 43.59% from the end of 2023, mainly covering factors such as dividends, value, and growth. Among them, dividend ETFs continued to gain favor from funds in the volatile market due to their strong defensive attributes and high investment safety margins. The scale increased by 22.9 billion yuan year-on-year to 65.2 billion yuan, a year-on-year increase of 54.10%, making them the most popular strategic ETFs.

From the perspective of bond ETFs, their scale continues to grow. In the first half of 2024, the bond market performed strongly overall, and the scale of bond ETFs grew rapidly. As of the end of June 2024, there were 20 bond ETFs with a total scale of 109.9 billion yuan, breaking the 100 billion yuan mark for the first time, an increase of 29.7 billion yuan from the end of 2023, exceeding the scale increase of bond ETFs in 2023, an increase of 37.09%.

From the perspective of commodity ETFs, their scale has increased significantly, with gold ETFs ranking first in terms of growth. At present, commodity ETFs on the market mainly track gold, soybean meal, nonferrous metals, energy and chemical products. As of the end of June 2024, there are 17 commodity ETFs with a total scale of 52.9 billion yuan, an increase of 22.4 billion yuan from the end of 2023, an increase of 73.17%. Among them, there are 14 gold ETFs with a scale of 50.6 billion yuan, accounting for 96% of the total scale of commodity ETFs.

Continue to move towards "new"

As one of the important tools for institutional asset allocation and resident wealth management, ETF has become an important carrier for various types of funds to enter the market. The fund scale has grown against the trend and played a good role as a market stabilizer. Against this background, the White Paper made four major forecasts on the development trend of my country's ETF market in the second half of the year.

First, we will conduct equity ETF layout around the concept of new productivity. On the one hand, this can meet investors' investment needs for high-tech, high-efficiency and high-quality assets; on the other hand, it can also empower technology companies with technological innovation capabilities and at the forefront of technology, and help the development of my country's high-tech and high-quality companies.

Second, the ETF product series will continue to expand, and the research and development of innovative products such as actively managed ETFs, REITs ETFs, commodity futures ETFs, derivative strategy ETFs, and multi-asset ETFs is expected to continue to advance, providing the market with more types of investment tools. At the same time, ETF supporting option products are expected to be further enriched to meet investors' risk management needs.

The third is to expand the scope of investment by using ETF cross-border connectivity. In the future, the domestic market will continue to strengthen multi-field cooperation with overseas exchanges and market institutions, continuously optimize the cross-border product system, and expand cross-border investment and financing channels.

Fourth, continue to optimize the ETF product ecosystem. In recent years, the ETF category has been continuously enriched, and the creation of a product ecosystem will become an important guarantee for the long-term development of the market. The ETF ecosystem includes business links such as product creation, sales, market making, trading and allocation, which requires exchanges, investors, securities firms, market makers, fund companies and other market participants to work together to promote the healthy operation of the ETF industry ecosystem. With the further diversification of asset allocation needs, the cooperation efficiency of ETF-related parties will be further improved, which will help the long-term prosperity and development of my country's ETF market.

Source: Securities Daily