The Chinese ETF market has experienced explosive growth in recent years, with inflows increasing significantly and breaking new records. According to Morningstar, annual inflows to China ETFs nearly quintupled over the past three years, reaching 604.3 billion yuan in 2023. The total assets under management (AUM) of ETFs in China more than doubled by the end of last year, hitting 1.82 trillion yuan.
Equity products have been the main driver of growth in the Chinese ETF market, representing 96% of the total 870 ETFs in the country by the end of 2023. Inflows to China’s equity ETFs reached record highs, surpassing total inflows from 2019 to 2022. The booming semiconductor sector attracted substantial assets into the sector equity tech and communications category, while there were net outflows in the sector equity financial and real estate category. Fixed income ETFs and commodities ETFs had slower growth rates compared to equity products.
The Chinese ETF market is dominated by leading providers such as China Asset Management, E Fund Management, and Huatai-PineBridge, who are the three largest ETF providers by AUM. The rapid growth of the Chinese ETF market has posed challenges for actively managed funds to outperform, leading institutional investors to flock to broad-based index-tracking ETFs. This trend has propelled China’s ETF market, doubling the total AUM to 2 trillion yuan in less than three years.
