Benefit from policy support,market effectiveness enhancement,and product advantages,equity ETFs have rapidly expanded in the recent stock market rebound,with the scale breaking through the 3 trillion yuan mark.The average annual growth rate over the past decade has reached 35%,making it the fastest-growing category in public mutual funds.
Industry insiders say that as a representative tool for index investment,stock ETFs are the main force driving the expansion of the ETF market,with market size and share continuously rising.This also means that the era of passive investment has arrived,and the development of ETFs has become an irreversible trend with broad development prospects in the future.
Equity ETF scale breaks through 3 trillion yuan
Wind data shows that as of October 10,the total scale of 997 listed ETFs in the entire market reached 3.65 trillion yuan.Among them,the scale of non-currency ETFs is 3.52 trillion yuan,and the scale of equity ETFs (including stock ETFs and cross-border ETFs) is 3.32 trillion yuan.
Equity ETFs are also the fastest-growing category among public mutual fund sub-categories.The current scale of 3.32 trillion yuan has increased by 15.19 times compared to 2014,with an average annual scale growth rate of 35% over the past decade.
China AMC said that in the first three quarters of this year,the A-share market was weak,and a large amount of funds were deployed through ETFs at low levels; at the end of September,the market rebounded rapidly,and under the pull of share growth and net value increase,the ETF scale quickly broke through the 3 trillion yuan mark.
Regarding the driving factors for the expansion of the ETF market,China AMC analyzed that from the policy level,at the end of last year,the social security fund included ETFs in the investment scope; in the first half of this year,the new "Nine National Articles" proposed to establish an ETF fast approval channel to promote the development of index investment; since September,stimulus policies have been densely released,including lowering interest rates and reserve requirements,reducing existing housing loan interest rates,and creating new monetary policy tools,all of which have helped the ETF market grow rapidly.In addition,China's capital market basic system is becoming more and more perfect,and the effectiveness of the A-share market is gradually increasing,which is conducive to the development of index funds.
Xu Zhihan,Assistant General Manager of Huaan Fund and Senior Director of the Index and Quantitative Investment Department,said that the development speed of ETFs has been accelerating.It took 16 years to reach 1 trillion yuan,and only one year to go from 2 trillion yuan to 3 trillion yuan,reflecting the market's wide recognition of this product.
He believes that the rapid growth of ETFs is the result of its own characteristics,the improvement of market maturity,and changes in investor structure: First,ETFs have the advantage of real-time trading,allowing investors to obtain the value of a basket of stocks at prices close to real-time; second,ETFs have the advantages of high transparency,low management fees,convenient trading,and good liquidity; third,large institutional investors such as Central Huijin have increased their investment in ETFs over the past year,and various investors have gradually realized the advantages of ETFs and used them as an important tool for optimizing asset allocation.
Hu Jie,General Manager of the Index Research and Investment Department of Huabao Fund,also believes that the "national team" is one of the important increments that cannot be ignored.This year,
the "national team" has entered the A-share market by purchasing ETFs and actively maintaining the stable operation of the capital market.Hu Jie added that the layout of ETF products has been continuously improving in terms of quantity,type,and richness,meeting the growing diversified allocation needs of different investors.In addition,under the recent widespread market rally,ETFs have become the sharpest "spear" in A-shares,attracting a large number of ordinary investors to participate.
Summarized by the Index Investment Department of Nanfang Fund,as the market efficiency further improves,the concept of index investment has gradually taken root in people's hearts.At the same time,against the backdrop of the gradual improvement of the index investment ecosystem,the tool attributes of ETFs have been recognized by more and more investors.This year,the rapid growth in the scale of ETFs is the result of the continuous support of relevant policies,the entry of long-term allocation funds into the market,and the increased allocation by institutions and individual investors.
The proportion of stock ETFs is continuously increasing.
In the process of the rapid growth of ETF scale,stock ETFs can be regarded as the "main force" driving the growth.
According to statistics from Huabao Fund,this year,the scale growth rate of stock ETFs is significantly higher than that of other types of ETFs.As of October 11,2024,the scale of ETFs in the entire market increased by 1.52 trillion yuan compared to the beginning of the year.Among them,the scale of stock ETFs increased by 1.39 trillion yuan,with 94 new stock ETFs added,contributing to the main scale increment; the proportion of stock ETFs in the scale of the entire market's ETFs increased from 70% to 80%.
Regarding the above phenomenon,Hu Jie interpreted that stock ETFs are a powerful tool for capturing market trends,and stock ETFs are not only suitable for individuals but also for institutions and large funds.For example,the Central Huijin Investment Company uses ETFs to allocate to the A-share market through increased holdings,maintaining the stable operation of the capital market.In addition,stock ETFs are also an important asset allocation tool for institutional investors such as insurance and bank wealth management.
Compared with overseas markets,the Index Investment Department of Huatai-PineBridge Fund pointed out that in major markets such as the United States,Europe,and Asia-Pacific,the proportion of stock ETFs has reached 70% to 80%,and the proportion of domestic stock ETFs is expected to continue to increase.As of the end of 2023,the proportion of stock ETFs in the total market value of stocks in the United States,Europe,and Japan was 13%,8.5%,and 7.9%,respectively,while the current proportion in the A-share market is about 3%,with a broad space for expansion in the future.
Looking forward,Xu Zhiyan believes that equity ETFs will still be the core of the ETF market,and their market share may continue to maintain a high level.At the same time,considering the huge scale of the domestic bond market and the wide variety of bond products such as bank wealth management,although bond ETFs face competition,they still have significant development potential due to their unique convenience and flexibility.For cross-border ETFs,although the current proportion is low,with the deepening of market openness and the growth of investors' global allocation needs,their market share is also expected to increase.As for commodity ETFs,they are currently mainly gold ETFs,and in the future,with the popularization of asset allocation concepts and technological progress,commodity ETFs will show significant allocation value and development potential in the medium and long term.
The development of passive investment is unstoppable.
In the view of industry insiders,the rapid growth of ETF scale reflects that index investment is increasingly taking root in people's hearts,and passive investment has become an irreversible trend.As a representative tool of index investment,ETFs have broad development prospects.Huaxia Fund believes that the development of the ETF market will show trends of diversification,specialization,and innovation,with various types of ETFs flourishing.The new "Nine National Policies" and related policies provide clear policy guidance and strong impetus for the development of ETFs.ETFs will attract more medium and long-term capital,helping the capital market to develop healthily and stably.
The Index Investment Department of Nanfang Fund is full of confidence in the development prospects of ETFs.The organization judges that emerging varieties such as Smart Beta ETFs may receive more attention in the future; the status of non-stock products such as bond ETFs and commodity ETFs in asset allocation is also expected to rise.
"The rapid growth of ETF scale reflects that the trend of passive investment is strengthening.In the future,as market efficiency further improves,the difficulty of obtaining excess returns through active management increases.At the same time,medium and long-term allocation funds enter the market,and the proportion of institutional investment rises.These trends are expected to jointly promote the further development of passive investment,and complement active investment to form a dynamic balance." said the Index Investment Department of Nanfang Fund.
"Compared with overseas developed markets,the scale of our country's ETFs is relatively small,and there is still a large development space in the future.Especially,the scale of stock ETFs is expected to show greater development space as residents' assets transfer and allocate." Yin Hao,the fund manager of Bosera Growth Enterprise Market ETF,said directly.