Major Chinese fund companies have announced a reduction in fees for a selection of equity exchange-traded funds (ETFs). This move intensifies the price war in the booming $400 billion ETF market.
What Happened: The fee cuts come a day after Wu Qing, China’s chief securities regulator, expressed support for index investment and fee reform in the fund industry. ETFs, which typically track an index and trade on exchanges, have seen significant growth this year as investors turn away from underperforming active fund managers, Reuters reported on Wednesday.
China Asset Management Co (ChinaAMC), leading the ETF market, announced it would reduce fees on eight ETF products, including the 160 billion yuan China SSE 50 ETF. The management fee will drop to 0.15% from 0.5%, and the custodian fee to 0.05% from 0.1%.
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Other fund companies such as E Fund Management, Huatai-PineBridge Fund Management, Harvest Fund Management, and HuaAn Fund Management have made similar announcements. This trend is expected to attract more capital into the market, with net inflows into China’s onshore ETFs surpassing 900 billion yuan this year, according to BNP Paribas.
Furthermore, China’s decision to cut interest rates in late October led to a decline in several China-focused ETFs in the U.S. This move, aimed at stimulating economic growth, instead raised concerns among investors about its broader implications.
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