ASHR has added nearly $145 million in new assets this month, but investors are also embracing rival funds. PEK, the oldest U.S.-listed A-shares ETF, has hauled in $38.2 million of its $92.4 million in assets under management. With $17 million in December inflows, KBA has more than quadrupled in size this month.
Next year could bring more upside for A-shares ETFs as local Chinese investors embrace equities. With local investors warming to equities over property, Goldman Sachs forecasts an estimated 400 billion yuan will depart China’s property market next year with the destination being A-shares equities.
Chinese investors are opening new brokerage accounts at the most rapid pace since 2007, boosting valuations on brokerage stocks. That has helped elevate A-shares ETFs, all of which devote significant portions of their weights to the financial services sector. ASHR allocates nearly 47% of its weight to financials while KBA’s weight to that sector is 40.6%.
Investor demand has been so robust for ASHR that three times since September has Deutsche Asset & Wealth Management been forced to limit creations in the ETF because it was bumping up against its Renminbi Qualified Foreign Institutional Investor (RQFII), which allows the funds to purchase A-shares equities. The most recent announcement of limited creations for ASHR was unveiled Monday and the creation limit will go into effect on Jan. 21, 2015.
Deutsche X-trackers Harvest CSI 300 China A-Shares Fund