Flurry Of A-Shares ETF Launches Continues

Another new exchange traded fund tracking China A-shares, the stocks trading on mainland exchanges in Shanghai and Shenzhen, debuted Thursday when State Street Corp.'s STT State Street Global Advisors (SSgA), the third-largest U.S. ETF issuer, entered the A-shares fray.

SSgA introduced the SPDR MSCI China A Shares IMI ETF XINA today, marking the debut of the fourth new A-shares ETF in just over a week. Last week, CSOP Asset Management, the largest renminbi-qualified institutional investor (RQFII) in the world, tripled the size of its U.S. exchange-traded funds lineup with the introduction of two new funds, the CSOP MSCI China A International Hedged ETF CNHX and the CSOP China CSI 300 A-H Dynamic ETF HAHA. 

Last Tuesday, the Deutsche X-trackers CSI 300 China A-Shares Hedged Equity ASHX also debuted.

With the number of A-shares ETFs trading in the U.S. increasing, it is imperative that new entrants to this space have traits that set themselves apart from rivals. The SPDR MSCI China A Shares IMI ETF has at least two such traits.

For example, “unlike some China A shares ETF offerings that are managed through third-party sub-advisors, XINA will be managed directly by State Street Global Advisors Asia Limited, based in Hong Kong,” according to a statement issued by SSgA. 

Second, XINA's annual expense ratio is 0.65 percent, or $65 per $10,000 invested. That makes the new fund the least expensive U.S.-listed A-shares ETF.

“The SPDR MSCI China A Shares IMI ETF seeks to track the performance of the MSCI China A International IMI Index. The index captures large, mid and small cap representation of Chinese companies with A share listings on the Shanghai or Shenzhen Stock Exchanges. As of September 30, 2015, the Index was comprised of 1795 constituents,” adds SSgA.

That means XINA has significantly deeper bench than some rival A-shares ETFs, most of which do not even hold 400 stocks.

Like most China ETF's, XINA's largest sector weight is financial services, though the new A-shares ETF's 24.6 percent weight to that sector is small compared some other China funds. Industrials command a 23.3 percent while consumer discretionary and materials names also command double-digit allocations. Only four stocks command weights north of one percent in XINA.

This is not SSgA's first rodeo with China ETFs. The firm issues the SPDR S&P China ETF GXC, one of the oldest and largest China ETFs trading in the U.S. GXC, which debuted in 2007, has nearly $923 million in assets under management.