Invesco has launched the first European ETF with targeted access to the ChiNext 50 index, named the Invesco ChiNext 50 UCITS ETF.
The launch comes amid a turbulent period for China’s stock market, with the SZSE Composite index falling by over 20% in the past year and over 9% in the past month. However, Invesco noted that China remains one of the world’s fastest-growing markets and holds a five-year plan to increase spending on research and development by at least 7% year on year.
The ChiNext 50 index is exposed to industries including tech and electronic vehicles. The ETF will follow a capped version of the ChiNext to “reduce concentration risk and ensure sufficient diversification”, ensuring no security goes above 8%, and that all securities weighted above 4.5% do not make up over 38% of the whole. The ETF will have an annual charge of 0.49%.
Chris Mellor, head of EMEA equity ETF product management at Invesco, said: “While the index has no explicit sector requirements or restrictions, investors can expect it to be naturally overweight technology, industrials and health care.
“The fund will invest in companies involved in innovative, fast growing areas such as artificial intelligence, electric vehicles, renewable energy, robotics, automation and biotech. Compared to broader Chinese indices, the average company in the ChiNext 50 index has used more than twice as much of its operating revenues in each of the past six years to fund R&D and drive innovation.”
Gary Buxton, head of EMEA and APAC ETFs and indexed strategies at Invesco, added: “One of the benefits of our global business model is having a strong local presence in major financial centres around the world.
“Our new ETF offers investors unique access to the long-term growth potential in China, specifically as it relates to innovation driving the transition to a new economy. As the ChiNext 50 index celebrates its tenth anniversary in June, this ETF also marks a milestone in the expansion of the index overseas, accelerating the internationalization of China A-shares.”
This article first appeared in our sister publication, Portfolio Adviser.
