Traders looking to add juice to already high-flying China A-shares exchange traded funds have a new option with today’s debut of the Direxion 2x Daily CSI 300 China A Share ETF (NYSEArca: CHAU), the first leveraged A-shares ETF to list in the U.S.
The Direxion 2x Daily CSI 300 China A Share ETF will attempt to deliver twice the daily performance of the CSI 300 Index. The CSI 300 Index is underlying benchmark for the Deutsche X-trackers Harvest CSI 300 China A-Shares ETF (NYSEArca: ASHR) and the Market Vectors ChinaAMC A-Share ETF (NYSEArca: PEK). [A Bold Approach to A-Shares ETFs]
China A-shares, which trade on the Shanghai and Shenzhen Stock Exchanges, account for roughly two-thirds of the market capitalization of Chinese stocks. Since most foreign investors cannot purchase China A-shares, investors in most existing China ETFs lack exposure to the majority of Chinese companies. Aside from CHAU, no other ETF currently provides leveraged exposure to this asset category, according to a statement from Direxion.
Over the past year, A-shares have been among the world’s best performers with ASHR and PEK each posting gains in excess of 110%. Three of the six ETFs that have hit all-time highs to this point in Thursday’s session are A-shares funds, including ASHR and PEK.
Last year, investors added nearly $475 million to ASHR and $44 million to PEK. PEK recently topped $100 million in assets under management. ASHR is the largest U.S.-listed A-shares ETF with nearly $1.2 billion in assets. [A-Shares ETF Tops $100M in AUM]
“Like all leveraged ETFs, this Fund is intended only for traders with an in-depth understanding of the risks associated with seeking leveraged investment results, and who plan to actively monitor and manage their positions. There is no guarantee that the Fund will meet its objective,” said Direxion of CHAU.
Direxion is also planning inverse A-shares ETF, the Direxion -1x Daily CSI 300 China A Share ETF (NYSEArca: CHAD). That ETF was originally supposed to debut today, but its launch date has been pushed back.
CHAU is not Direxion’s first leveraged China ETF. The firm sponsors the Direxion Daily China 3x Bull (NYSEArca: YINN) and the Direxion Daily FTSE China Bear 3X Shares (NYSEArca: YANG), the triple-leveraged answers to the iShares China Large-Cap ETF (NYSEArca: FXI), the largest China ETF trading in the U.S.
CHAU charges 0.95% per year.
ETF Trends editorial team contributed to this post.