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.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.