Fund review: BlackRock China A-share ETF

Fund review: BlackRock China A-share ETF

The iShares MSCI China A Ucits ETF – the first ETF to track China A shares – has been launched by BlackRock on the London Stock Exchange. This new offering gives international investors a chance to access China’s A-share equity market.

A-shares are those that are listed on the Shanghai and Shenzhen Stock Exchanges and represent the largest single segment of the Chinese equity market. These shares were one of the best performing types of equities in 2014, reflecting the 58 per cent rise of the Shanghai Composite index and its opening to foreign investors.

Only Chinese nationals and some foreign investors who have access to a limited number of tightly regulated channels can purchase A-shares directly. This ETF broadens investors’ access to this previously difficult market.

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A total expense ratio of 0.65 per cent is incurred with the fund, which was created to complement other types of Chinese equity exposure to international ETF investors.

Tom Fekete, head of product for iShares in EMEA, said that the group selected the MSCI index for its diversified basket of A-shares and chose the physical replication model based on customer feedback. He said the fund offers high quality, low-cost exposure to one of the few global equity markets that is truly difficult for international investors to enter.


The introduction of the Shanghai-Hong Kong Stock Connect, often referred to as Mutual Market Access (MMA), late last year opened up the A- and H-share markets to a new set of foreign investors who would not have had access previously to this type of share.

A-shares are listed on the Shanghai exchange, while H-shares refer to those on the Hong Kong Stock Exchange. The Stock Connect allow investors in mainland China to purchase Hong Kong-listed stocks, while also enabling overseas investors to buy shares on the Shanghai Stock Exchange. The largest sectors weightings in the market include financials – the largest sector at 34.4 per cent of the portfolio – while industrials make up 18.8 per cent and consumer discretionary at 10.4 per cent.

The top constituent company listed on the index is Ping An Insurance A, coming in at 2.8 per cent of the index and 8 per cent of the financials sector alone.

The iShares MSCI China A Ucits ETF, being the first of its kind, is a good way for investors to add a unique diversification to their portfolio with the ease of an ETF.

Though investors need to bear in mind when investing in ETFs that they track the performance of the index, and therefore do not usually outperform the market.