Vanguard Lands Massive RQFII Quota

“The initial weighting of China A Shares in the FTSE Emerging inclusion indexes will be approximately 5%. This is expected to increase to 32% (at 31-March 2015 market values) when China A Shares are fully available to international investors, and hence resulting in Chinese stocks (including B-Share, H-Share, P Chips and Red Chips) to make up 50% of FTSE Emerging Index,” FTSE Russell previously said in statement.

Through the changes, VWO will be the first broad market-cap-weighted index fund to include both all-cap exposure and China A-shares as the ETF moves toward a more inclusive market-cap weighted methodology. While current index-based emerging market funds include a heavy tilt toward China, most offerings only track Chinese H-shares that are listed in Hong Kong or Chinese companies listed in the U.S. Consequently, with the inclusion of Chinese A-shares, China’s domestic markets may play a more direct role in investors’ portfolios.

“In June, Vanguard announced it had received the largest first-time quota ever awarded, at 10 billion renminbi, in tandem with the firm’s decision to benchmark its then-$69 billion emerging markets stock index fund/exchange-traded fund to a new FTSE China inclusion index with an initial 5% weighting for A shares,” according to Pensions & Investments.

Vanguard FTSE Emerging Markets ETF