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European investors targeted for Chinese index fund

Chinese_indices1JP Morgan Asset Management has expanded its range of actively-managed ETFs, with a product that offers exposure to Chinese equities.

The JP Morgan AM China A Research Enhanced Index Equity (ESG) Ucits ETF is listed on the London Stock Exchange, the SIX Swiss Exchange and in Frankfurt on the Deutsche Boerse.

The ETF focussed on Chinese equities has been launched as part of the company’s Research Enhanced Index range, which was launched after the asset manager recognised an absence of exposure to onshore Chinese equities in investor portfolios.

“Despite being one of the largest and fastest-growing economies in the world, investors’ exposure to onshore Chinese equities, remains relatively low,” said Olivier Paquier, head of ETF distribution, EMEA at JP Morgan Asset Management.

However, while the overall percentage of Chinese equities within investor portfolios remain comparatively low, the popularity of Chinese equities is growing.

An analysis of Bloomberg data, reported in the Financial Times, found that overseas investors purchased some $35.3 billion of Chinese stocks between 1 January and 14 July 2021 through trading platforms that link Hong Kong to exchanges in Shanghai and Shenzhen.

More recently, inflows into mainland Chinese stock funds in January 2022 totalled some $16.6 billion, according to data from EPFR Global, cited by CNBC. This followed inflows of $11 billion in December 2021.

JP Morgan’s Paquier said that the average international investor’s total China exposure is around 4.6% of total portfolio assets, with a large part of this total likely to be in offshore Chinese equities through emerging markets equity strategies.

He added that this ETF may help investors to “find a balance in the representation of Chinese equities in their portfolios.”

The company’s Research Enhanced Index range of funds are designed for investors looking for funds to use as building blocks for core allocations within their portfolio.

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