A Fee War Could Be Brewing For A-Shares ETFs
Alright, let's not get too carried away, but one issuer did lower the annual expense ratio on its U.S.-listed China A-shares exchange traded fund. On Thursday, the CSOP FTSE China A50 ETF (NYSE: AFTY) saw its expense ratio chopped to 0.7 percent per year from 0.99 percent.
Translation: Investors planning on making the CSOP FTSE China A50 ETF a long-term holding will now pay $70 for every $10,000 invested per year, down from $99 a year per $10,000 invested. Hong Kong-based CSOP Asset Management, AFTY's issuer, is the largest renminbi qualified institutional investor (RQFII) in the world.
The fee cut for AFTY makes the ETF less expensive than the Deutsche X-trackers Harvest CSI 300 China A-Shares ETF (NYSE: ASHR), the largest U.S.-listed A-shares, by 10 basis points per year. ASHR is home to nearly $400 million in assets under management.
AFTY debuted in March and came to market with $237 million in assets under management, the largest initial investment among all U.S.-listed equity ETFs since 2007, according to CSOP. At the time of its debut, AFTY was the second-largest A-shares ETF trading in New York, trailing only ASHR.
However, an epic rout that sent mainland Chinese stocks to among this year's worst global performers after being among the best in the first several months of 2015 prompted investors to depart A-shares ETFs in significant fashion. For example, AFTY has seen its assets under management tally dwindle to $6.88 million, according to issuer data.
Based purely on asset-gathering proficiency, well, actually based on performance as well, this year's best A-shares ETF has been the Direxion Daily CSI 300 China A Share Bear 1X Shares (NYSE: CHAD). CHAD, the lone inverse A-shares ETF trading in the US, has hauled in nearly $236 million in assets since coming to market in April, making it one of the most successful new ETFs this year of any stripe.
With its new expense ratio, AFTY is also two basis points per less expensive than the Market Vectors ChinaAMC A-Share ETF (NYSE: PEK), the oldest A-shares ETF trading in the US. AFTY is benchmarked to the FTSE China A50 Index, which tracks the 50 largest stocks listed in Shanghai and Shenzhen.
AFTY allocates almost 55.1 percent of its weight to financial services stocks, more than quadruple its weight to industrials, the ETF's second-largest sector exposure. At 9.4 percent, utilities are the only other group with close to a double-digit weight in AFTY.
China's onshore equity market, the A-shares market, is the second-largest equity market in the world after the US.
Bloomberg originally reported the news of AFTY's lower fees.
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