An Obscure China ETF Finally Gets Some Love

March 7, 2019 8:41 am
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An Obscure China ETF Finally Gets Some Love

For much of its nearly five years on the market, the Xtrackers MSCI All China Equity ETF (NYSE:CN) has toiled in relative anonymity relative to other China exchange traded funds.

CN could be on the cusp of shedding that anonymity and not just because Chinese stocks are rallying this year.

What Happened

CN, which turns five years old next month, tracks the MSCI China All Shares Index, giving investors some exposure to various share classes of stocks trading in Hong Kong and on mainland China, also known as A-shares.

“The MSCI China All Shares Index captures large and mid-cap representation across China A-shares, B-shares, H-shares, Red-chips, and P-chips,” according to DWS.

Why It's Important

On March 5, CN took a major step toward shedding its overlooked status when nearly $115 million in new assets flowed into the fund. Only six ETFs saw larger inflows on that day than did CN. That took CN's assets under management tally to a respectable $158.31 million as of March 5.

Sudden interest in CN could be the result of the recent announcement that index provider MSCI Inc. (NYSE:MSCI) will increase the prominence of A-shares stocks in its international benchmarks. That recent decision is relevant to CN because while the ETF has 230 holdings, it allocates a third of its weight to the Xtrackers MSCI China A Inclusion Equity ETF (NYSE:ASHX).

CN also has a 5.21 weight to the Xtrackers Harvest CSI 500 China A-Shares Small Cap ETF (NYSE:ASHS), a small-cap A-shares fund.

What's Next

There can be no guarantees that CN will continue receiving new inflows and it is entirely possible that the $115 million that flowed into the fund on Tuesday was courtesy of just one ETF strategist or money manager.

All that said, ETF inflows have a way of begetting more inflows. With Chinese stocks trending higher, CN's new found heft could aid the fund in its quest to get bigger as 2019 moves along.

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