The FSA Spy market buzz – 13 December 2024
M&G’s positive outlook; Wisdom from Schroders’s podcast; Alliance Bernstein on the power of curiosity; Janus Henderson on responsible AI; China’s retirement revolution; Apple and much more.
HEAD-TO-HEAD: Seven China equity ETFs compared
FSA compares no fewer than seven China equity ETFs available to Hong Kong investors tracking the same index, the CSI 300.
Data: FE, Morningstar, US dollars
There are big differences in sizes among the seven ETFs. The largest, the ChinaAMC ETF has $1.68bn in AUM. Two other funds with substantial assets are: the BOC HK Wise ETF, with $367m, and the DB x-Trackers Ucits ETF with $352m of AUM.
The smallest, the C Shares ETF had only $1.6m of assets in October, while the remaining three were in the $20m-$30m range.
“In general, if the ETF is small in size, the fixed costs can actually add up,” Choy said, negatively affecting the fund’s performance. The fixed costs, which are reflected in the ETF’s total expense ratio (TER), include listing fees and auditor fees, among others, Choy noted.
The poor performance of the C Shares ETF, the smallest in our sample, can likely be attributed to the effect of fixed costs eating into the value of the portfolio. While many other factors play a role, we observe that the largest fund, the China AMC ETF, had a low tracking error, delivered the best three-year performance and placed third out of seven in the one-year return ranking.
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