ETF 2020 Evaluation: A Breakthrough Experiment And Puzzle Of Public Offering

After reaching the 600 billion mark for the first time at the beginning of last year, public ETF products will continue to develop in 2020.

By the end of 2020, the total scale of stock ETF products has exceeded 750 billion.

According to the statistics of 21st century economic reporter, by the end of 2019, the scale of domestic stock ETF totaled 555.494 billion yuan, an increase of 68% compared with the scale of 331.381 billion yuan at the end of 2018; and by the end of 2020, the number continued to grow, reaching 752.219 billion yuan.

Looking back on the layout of public funds in ETF products this year, we can see that there are not only the continuous development of old head companies, but also the entry of new players into the blue ocean competition.

According to the reporter's statistics, according to the starting date of subscription, 118 ETF products will be issued in the whole market in 2020, with a total number of 113.699 billion. Among them, Huaxia China Securities new energy vehicle ETF has the largest share of combined issuance, with 10.763 billion shares issued by the fund, which is also the only ETF product with more than 10 billion shares issued in 2020.

"With the continuous improvement of A-share maturity and value investment orientation, the rise of index investment will become the general trend in the future." "Last year, we set up a number of industry ETFs and broad base enhanced ETFs. In terms of product layout, we didn't go to the places with the most people, or we wanted to design products with scarcity in the market."

Scale up again

After two years of hot equity market, index investment has become one of the hot choices for investors.

According to the data, in 2020, there are more than 100 active equity funds with a return of more than 100%. In terms of equity ETFs, there are also two ETFs whose earnings will double in 2020.

The return of Penghua Zhongzheng liquor ETF in 2020 is 125.32%, ranking first in the stock ETF in the whole market, followed by Ping An Zhongzheng new energy automobile industry ETF, with the annual return of 108.16% in 2020.

Compared with 2019, equity ETFs are more sought after by investors in 2020, which directly stimulates the growth of ETFs.

For stock ETFs with a scale of over 750 billion, by the end of 2020, there were 17 ETF products in the whole market, with the scale of more than 10 billion. In 2019, the number was 13.

Overall, by the end of 2020, the largest ETF of the fund is Huaxia Shanghai Stock Exchange 50ETF, with a scale of 56.574 billion, and the first ETF with a scale of more than 50 billion in the market. Compared with the scale in 2019, the ETF continues to grow by 22%.

The second largest is Huatai Bairui Hushen 300etf. The scale of the fund at the end of 2020 was 45.748 billion yuan, up 13% year on year.

It is worth mentioning that the scale performance of ETF products in 2020 is obviously different from that in previous years. Cathay Pacific China Securities all index securities company ETF becomes the first industry ETF with scale entering the top three of stock type ETF. This broke the previous stock ETF by the broad base ETF occupy the top of the scale of the situation.

According to the data, the ETF scale of Cathay Pacific China Securities all index securities company at the end of 2020 was 38.905 billion yuan, which increased by 24.937 billion yuan compared with the end of 2019, with a year-on-year increase of 179%.

In fact, Cathay Pacific China Securities all refers to the securities company ETF, which is also a stock type ETF with the highest turnover in 2020, and the annual turnover of the fund in 2020 will reach 471.752 billion yuan. Compared with the transaction volume of RMB 153.071 billion in 2019, the turnover increased by 318.681 billion or 208%.

"The securities sector, with its high beta attribute, is a weathervane of market risk preference and has a certain attraction to investors in various market conditions. In the long run, the fundamentals of the securities sector are also relatively good. On the one hand, in 2020, the main business such as brokerage and self support will be completed with good industry fundamentals; on the other hand, the continuous promotion of capital market reform and the continuous implementation of comprehensive registration system and other policies will bring more space for the development of the industry. It deserves long-term attention. " According to an interview with Cathay Pacific Foundation.

According to the data, Cathay Pacific Fund's ETF management scale in the whole market also rose in 2020. The ETF management scale in the whole market of Cathay Pacific Fund in 2020 was 86.092 billion yuan, ranking second only to Huaxia Fund. Compared with 2019, Cathay Pacific Fund's ranking has increased by 5 places.

According to the 21st century economic report, in 2020, Cathay Pacific Fund mainly follows the idea of "old infrastructure" and "new infrastructure" in the layout of ETF products, and continues to explore industries with certain market demand and market capacity and "can be inserted into the wings of ETF".

Cathay Pacific Fund has been involved in both traditional cyclical industries and emerging sunrise industries, laying out the first steel ETF, coal ETF in the market, and the first new energy vehicle theme ETF in Shenzhen Stock Exchange.

The perplexity of ETF's "shareholding"

In fact, the explosive growth of ETF has also brought pressure on the market and regulation.

In 2020, the phenomenon of funds participating in market speculation through ETF is frequent. As the most "desirable" long-term capital loading platform of the regulatory authorities, ETF has become a tool for some short-term funds to obtain excess returns. Once the market changes, it will also cause turbulence in relevant sectors.

Undoubtedly, this also makes the goal of "long-term capital entering the market" deviated.

Because many industries ETFs are dominated by individual investors, this also makes investors speculate on ETFs as stocks to gain short-term returns.

For example, for the technology ETFs that are hot in 2020, some ETFs have been enlarged after listing and even reached the top in a period of time. The reason is the "take-off" of the technology cycle. But after the market situation changes, the share change of this kind of products is more obvious.

Take Huaxia Guozheng semiconductor chip ETF, the largest technology ETF by the end of 2020, as an example. The scale of the fund was about 5.4 billion when it was established, and by the end of 2020, the scale of the fund exceeded 23 billion.

According to the listing and trading statement of the fund in February this year, as of February 3, 2020, the fund shares held by institutional investors accounted for 1.6% of the total fund shares, while the remaining 98.4% shares were held by individual investors.

In the early February after the listing of science and technology stocks volatility, China Securities semiconductor chip ETF single day scale up and down more than a billion or so. For example, on March 11, more than 500 million shares were redeemed. Over the same period, the fund fell 4.65% and the chip index fell 3.21%.

However, due to the rapid expansion of the fund scale, many fund companies are actively deploying technology ETFs in the same period, and the publicity for ETF products is also increasing. For a while, 5g, semiconductor and chip ETF became popular players.

An employee told our reporter frankly that an organization's investment in open screen advertising on the most expensive platform in the industry is not small.

Under the crazy promotion of the market, it has also attracted the attention of regulatory agencies. According to the reporter of 21st century economic report, the regulatory authorities have deliberately slowed down the approval pace of Pan science and technology equity funds, which has also led to the extension of approval time limit for ETFs on topics such as artificial intelligence, blockchain, big data, Internet of things, biotechnology, etc. reported by many companies.

According to the 21st century economic report, many science and technology ETFs that have been declared in early 2020 have not been approved as of February 4, 2021.

For example, there is no feedback on the cse-50etf declared by Huabao fund in January 2020 and the cse-50etf declared by Hua'an fund in March 2020; the subject ETF of CSI Internet of things declared by Harvest Fund, China Merchants Fund and Huatai Bairui fund in April last year only got the first feedback in May last year, and has not been approved.

Just last year, regulators also planned to tighten the front-end regulatory requirements for ETF products, including soliciting opinions from some fund companies on ETF index compilation rules, requiring the target index tracked by ETF to be published for at least one year, and limiting the proportion of index component stock market value to the total market value.

The old problem of ETF swap

In fact, as early as 2019, when ETF entered the stage of rapid development, there were listed companies participating in ETF share swap, which caused losses to ordinary investors.

Stock subscription is a unique issuance method of ETF. Investors can subscribe for ETF shares by using single or multiple ETF underlying index constituent stocks during the raising period. However, after some listed companies over purchase, the large amount of purchase directly leads to the deviation of ETF net value.

This has also led to the fund companies to assist listed companies to reduce the majority of shareholders.

Subsequently, regulators also took action on the loopholes. In view of the phenomenon that shareholders of listed companies swap ETFs for shares, the regulatory window guidance requires that the proportion of shareholders' swap purchase should not exceed the weight of the index tracked by the ETF when the fund is established. There are also some public funds involved in ETF swap issues and were named and punished by the regulatory authorities.

It is worth noting that the ETF collective subscription mechanism proposed by Shanghai and Shenzhen stock exchanges for many times in 2020 was also implemented in January this year.

In this mode, investors are allowed to use single or multiple underlying index component securities as consideration and purchase ETF shares within a specified period of time without causing material adverse impact on the interests of the original fund share holders.

Compared with the ordinary subscription of ETF in the secondary market, the investors purchase a package of stocks corresponding to the ETF tracking index and apply for the ETF shares with the corresponding weight proportion. The collective subscription mechanism is an innovation based on the ordinary subscription of ETF.

On January 23, ETFs of eight fund companies, including Huaxia Shanghai Stock Exchange 50ETF, Huatai Bairui Hushen 300etf, southern China Securities 500etf, Fuguo Shanghai Composite Index ETF, Boshi China Securities 500etf, Guangfa gem ETF, e-fund Shenzhen stock 100ETF, Jiashi Hushen 300etf, etc., announced the opening of collective subscription business from January 26.

According to the institutional analysis, although collective subscription is also used to purchase single or multiple bonds, the fund company will adjust the position into an index structure on behalf of the fund company. Only when it meets the requirements of completely copying the index, can ETF be truly "delivered" to the investors who participate in the exchange. The profits and losses incurred during the period are borne by the investors of collective purchase, which does not affect the interests of the original ETF share holders, and can protect the overall ETF Effectiveness tracking.

CICC pointed out that under the traditional purchase mode, individual investors with small amount of capital can not fully and effectively participate in the physical purchase of ETF. Collective subscription can complement and improve the existing subscription system, expand the scope of ETF investors, improve the market trading efficiency, and further drive the expansion of ETF market.

"However, due to the convenience of collective subscription, it will be easier for major shareholders of listed companies to change their purchase." A public fund source said.