A shares are mainland China incorporated companies listed on the Shanghai and Shenzhen Stock Exchanges and represent the largest single segment of the Chinese equity market. They were amongst the best performing equities in the world in 2014, when the Shanghai Composite Index rose 58%. However the direct purchase of A shares is open only to Chinese nationals plus foreign investors able to access a limited number of tightly controlled and regulated channels, restricting access to the market for many.
The iShares MSCI China A UCITS ETF provides investors with exposure to China A shares through BlackRock’s own Renminbi Qualified Foreign Institutional Investor (RQFII) quota. The ETF is the only UCITS fund to track the MSCI China A International Index.
This index represents a broad and diversified basket of over 300 large and mid cap stocks.
The fund is a physical fund, meaning it purchases and holds the underlying stocks, and the management of the ETF is conducted solely within BlackRock. The fund has a total expense ratio of 0.65%, lower than comparable physically replicating China A share ETFs open to international investors.
BlackRock’s Tom Fekete, Head of Product for iShares in EMEA, commented:
“Investor interest in China is high and shows no sign of abating. The world’s second largest economy is increasingly opening its stock market to greater foreign investment, and this ETF provides investors with a new option for accessing Chinese shares. We selected the MSCI index very carefully for its diversified basket of A shares, and built the ETF using the physical replication model that investors tell us they prefer. This fund offers high quality, low-cost exposure to one of the few global equity markets that are truly difficult for international investors to enter.”
The iShares MSCI China A UCITS ETF complements other types of Chinese equity exposure BlackRock provides to international ETF investors, including the iShares China Large Cap UCITS ETF, which tracks the FTSE China 50 Index and offers exposure to Chinese stocks listed on the Hong Kong Stock Exchange.
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