Global investment manager Vanguard will offer exposure to China A-shares through Vanguard’s emerging markets ETF.
Vanguard was granted an RMB 10 billion (US$1.6 billion) quota on 24 April 2015 by the China Securities and Regulatory Commission (CSRC) and State Administration, following the approval of the firm’s Renminbi Qualified Foreign Institutional Investor licence (RQFII) on 2 March 2015.
The fund will now move from the FTSE Emerging Index to the broader FTSE Emerging Markets All Cap China A-shares Inclusion Index, which includes exposure to A-shares and small-cap securities.
Speaking to InvestorDaily, Vanguard head of investments Rodney Comegys said, “The China A-shares market is clearly an emerging market and one that belongs in a fund, but previously there was no way for non-Chinese investors to invest in it.”
According to Mr Comegys, the fund will begin trading in the second half of this year.
If the fund grows larger, Vanguard – through HSBC as custodian – will apply for additional quotas in order to increase China A-shares investment, Mr Comegys said.
The benchmark for the ETF includes China A-shares at around a 5.6 per cent weighting.
Vanguard chief executive Bill McNabb added: “As the first major emerging markets fund to add exposure to Chinese A-shares, the fund will benefit investors with more diversification, deeper emerging markets exposure, and greater access to the growth potential of Chinese equities.”
“The best proxy for a market is one that provides the most complete and comprehensive coverage, which is why we believe these moves are in the best interests of investors over the long term,” Mr McNabb said.
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