U.S. investors have gained exposure to overseas markets through exchange traded funds, and now, Chinese investors can access our own markets through a new China-listed “cross-border” ETF.
According to the NASDAQ OMX Group (NasdaqGS: NDAQ), Guotai Asset Management, a Chinese money manager, launched China’s first cross-border ETF, the Guotai NASDAQ-100 Exchange Traded Fund, on the Shanghai Stock Exchange.
The Guotai Nasdaq-100 fund will allow Chinese investors to invest in the large, liquid companies traded on the NASDAQ. The new China-listed ETF greatly improves Chinese investors’ ability to access U.S. markets.
“The Guotai NASDAQ-100 ETF enables individual and institutional investors in China to access 100 of the world’s largest and fastest growing companies — including Baidu, Microsoft, Apple and Starbucks,” NASDAQ OMX Vice President Robert Hughes said in a press release.
The Nasdaq-100 includes 100 largest, non-financial securities by market-cap from the Nasdaq exchange.
Previously, investors in China could only gain exposure to U.S. markets through ordinary “Qualified Domestic Institutional Investor funds” – the QDII program grants a limited access for institutional investors, like banks, funds and investment companies, to invest in foreign-based securities. In the People’s Republic of China, the restrictions helped reduce conversion risks in a non-free floating currency.
ETFs have become a very popular investment vehicle in Chinese markets. According to BlackRock, China-listed ETFs have garnered $937.4 billion year-to-date. [China-Listed ETF Market Experiences Boom in Sector Plays]
Back in the States, U.S. investors can track the Nasdaq-100 through the PowerShares QQQ Trust (NYSEArca: QQQ). QQQ has a 0.20% expense ratio. Top holdings include Apple 12.0%, Microsoft 8.1%, Google 6.8%, Oracle 4.6% and Amazon 3.5%.
For more information on the ETF industry, visit our current affairs category.
Max Chen contributed to this article.