ETFs are characterized by their low cost, flexible trading, and rich variety, allowing for long-term allocation, short-term fluctuations, and the construction of various strategies in combination with risk management tools.

"After this market trend, everyone can clearly see that ETFs and other market tools have become the first choice for many investors, especially individual investors, to participate in the market during the rise," said Li Yimei, General Manager of Huaxia Fund, at the High-Quality Development Ecology Conference of the ETF Market on October 11.

Xu Zhihan, Assistant General Manager of Huaan Fund, also stated that nowadays, ETFs are no longer a simple investment track but an important business segment.

ETFs Accelerate Expansion

In recent years, ETFs have entered a fast track of rapid development, becoming an indispensable important tool for investors' asset allocation due to their unique market positioning and advantages. At the same time, the product system of the ETF market is becoming increasingly rich, providing investors with more diverse and flexible investment options.

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Li Yimei said that the total scale of the domestic ETF market currently exceeds 3.6 trillion yuan. After 20 years of development, ETFs have gradually become the focus of market funds. In terms of scale changes, it took 16 years for domestic ETFs to grow from 0 to 1 trillion; it took 3 years to grow from 1 trillion to 2 trillion, and after 10 months, it broke through 3 trillion in September this year, which is a truly accelerated upward process.

Data shows that as of October 10, the scale of ETFs in the entire market has reached 3.65 trillion, an increase of 1.6 trillion compared to the beginning of the year.

However, the current scale of ETFs accounts for only about 4% of the stock market, and there is still a lot of room for growth compared to the $7.7 trillion in the US market. This year, the new "Nine National Articles" of the capital market were released, which specifically proposed: to establish a fast approval channel for exchange-traded funds (ETFs) and promote the development of index investment.

In response, the person in charge of the Shenzhen Stock Exchange said that the new "Nine National Articles" clearly proposed to promote the development of index investment. At present, in the process of boosting the capital market, vigorously guiding medium and long-term funds into the market, and unblocking the capital market entry points for social security, insurance, and financial management, the high-quality development of the ETF market has ushered in a rare opportunity, and the unique advantages of ETFs, which save money, worry, time, and effort, are increasingly recognized by investors.

Among the many ETF products, the performance of broad-based index ETFs is particularly outstanding. Li Yimei believes that in terms of development trends, broad-based funds are still the most vibrant in ETF products, and their proportion and scale will continue to rise in the future. At the same time, industry indices are continuously being optimized, and cross-border index products are expected to accelerate. For investors, the demand for ETFs will also develop from individual products to strategic and combined "solutions".There is still room for optimization in these areas.

Chen Ge, General Manager of Fu Guo Fund, believes that the future ETF market needs to make some optimizations. First, optimize the products; second, enhance market liquidity; third, enrich supporting derivatives; and fourth, improve the investment experience.

"Although the scale of ETFs is currently large, homogenization is quite serious, mainly focusing on traditional broad-based products represented by the CSI 300. They can be further optimized and updated, such as enriching index investment strategies. In addition, equity ETFs dominate alone, and the coordinated development of commodity ETFs and bond ETFs should be promoted to give investors more choices," said Chen Ge.

Fang Yitian, Chairman of Wanjia Fund, suggested further enriching the functions of ETFs, including dividends within them.

"Referring to the Japanese experience, the proportion of public funds in Japan that pay dividends monthly reaches 19%. Before 2024, dividends in the ETF market were not common, and the number of products that pay dividends continuously is even fewer. The new 'Nine National Articles' propose to strengthen the dividend of listed companies, so in the first half of the year, we have seen a significant increase in the frequency and amount of dividends of domestic ETFs," said Fang Yitian.

In addition, Fang Yitian also pointed out the need to promote changes in the sales model of ETF funds and shape reasonable expectations for the products.

"In the past, ETFs focused more on the scale of the first issue, but the short-term marketing brought poor investor stickiness, and there was a general phenomenon of a large reduction in scale after listing, which is a consumption for managers, sales institutions, and investors. In fact, the situation of emphasizing the first issue and neglecting the follow-up has also been a problem that has plagued the industry for many years," said Fang Yitian.

Fang Yitian believes that compared to the first issue, doing a good job in in-depth service for investors through continuous marketing and carrying out sales work based on investor returns is to help investors bridge and eliminate the gap between actual returns and expected returns.

"Bringing in" and "going out"

ETFs are both spears and shields, and they are also an important part of patient capital. As the high-level opening of the capital market continues to advance steadily, the dividends continue to be released, and the convenience of foreign investment in Chinese assets is further improved. In the wave of global asset allocation, the valuation psychology of Chinese A-shares is gradually revealed, and the demand of international investors to allocate high-quality Chinese assets through ETFs continues to increase.In the realm of ETF cross-border cooperation, Yu Wenhong, Deputy General Manager of Southern Fund, believes that the internationalization of ETFs is a vivid practice of high-level opening up to the outside world. It not only serves the wealth management needs of residents but also introduces fresh capital into the domestic market.

Regarding the introduction of foreign assets, Yu Wenhong considers that cross-border ETFs meet investors' global allocation needs, providing convenient investment tools for medium and long-term funds such as insurance and pensions. At the same time, cross-border investment places higher demands on investors' ability to select investment targets. The transparent and stable style of the index investment market also helps investors to diversify risks.

In terms of domestic market expansion, Yu Wenhong believes that guiding international funds to participate in the A-share market through ETFs helps to further enrich the investor structure of China's capital market and introduce long-term capital. Additionally, overseas investors can leverage their own investment research capabilities to perform the function of value discovery, enhancing the transparency and effectiveness of the domestic capital market.