Since the beginning of the year, there have been many catalytic factors inside and outside the AI industry chain, the main line of policy and the wave of overseas science and technology resonate, and related ETFs have also risen sharply, with an increase of more than 30%. In addition, it is worth mentioning that the inflow of funds is also very obvious during the big rise.
For example, the latest ** shares of artificial intelligence AIETF (515070) and robot ETF (562500) rose to 2.2 billion and 1.3 billion, both hitting new highs since listing. At the same time, small-scale ETFs such as Cloud Computing 50 ETF (516630) are also frequently favored by funds, and their share continues to climb (**wind).
*: wind, as of 202402.29**。
Many investors have to ask: what does it mean for the ETF share to increase significantly, especially the upside increase?
There are a few knowledge points involved here:The trading structure of ETFs, the unique "in-kind redemption" and "cash substitution" models, and the risk-return characteristics of industry-themed ETFs.
1. ETF trading structure: mainly institutional investors
Although the overall proportion of the A**field is relatively large, even more than seventy percent of the ** are **. However, when it comes to on-exchange ETFs, institutional investors still hold a higher proportion of shares, and trading is more active. (*Shanghai ** Exchange ETF Industry Development Report).
The data shows that although individual investors have accelerated their entry into ETFs in recent years, they are still dominated by institutions. As of the end of 2023, institutional investors held 6674%。From the perspective of transaction structure, the total size of institutional trading of Shanghai ETFs accounted for 5749%, all of which are more than individual investors. (*Shanghai ** Exchange ETF Industry Development Report).
For example, in the holder structure of CSI 500 ETF (512500), institutional investors hold 86% of the shares (*CSI 500 ETF announcement, as of 2023 interim report).
Compared with those who like to chase up and down, institutional investors have more powerful investment capabilities and decision-making capabilities, so they are often prescient and contrarian investment, so they reflect the upward flow of ETF funds, which usually shows the characteristics of "big rise, big out, big fall and big in", especially in the stage of sideways. (*China**Daily, Huaxia**).
The rebalancing data of the institution on ** is generally not known until the regular quarterly report is disclosed, which is not only infrequent but also lacks timeliness. The ETF share data is updated daily in ** software, which is a high-frequency data that our ordinary investors can gain insight into the flow of institutional funds. (*Celestial Wind**).
Even if ** continues to rise by 20cm or even the board, there are still many institutional investors who choose ETFs with relatively small gains. Because ETFs have the following advantages:
1) Relatively single**, risk diversification and volatility are generally smaller;
2) Compared with **, ETF fees are low, and stamp duty is free when sold;
3) ETFs have option tools for hedging, which can effectively cope with market fluctuations;
4) Finally, and most importantly, a large, liquid ETF can hold a large amount of funds.
2. ETF shares**: on-exchange or over-the-counter subscription?
In the A** market, there are two ways to get ETF shares: one is to directly ** in the market, about 100 yuan per hand; The other is over-the-counter subscription, where a basket of constituent stocks and cash are exchanged for ETF shares, usually with a threshold of up to one million, mostly for institutional investors.
In addition, market makers and other institutions will provide good liquidity for their on-exchange trading by completing the creation of over-the-counter shares. Either way, it will be reflected in an increase in ETF shares. (*Celestial Wind**).
(*Celestial Wind**).
ETF-specific "in-kind redemption" mechanism:
Chart: ETF primary market subscription and redemption diagram.
Many ETFs do not have to use "in-kind" (i.e., **) for redemption, but also accept a certain percentage of cash as the redemption consideration under the premise of meeting certain conditions and rules, and the redemption is generally in kind, but some of them also use a 100% all-cash alternative model for cross-border ETFs and commodity** ETFs. On the ** software, you can see "ETF cash substitution ratio varies from 50% or 100%". (Tianfeng**, Huaxia**).
3. ETF share increase: **or long-term capital intervention, how to judge whether there is a trend**?
For ** funds, the convenience of trading will generally be considered, through the field directly **, short-term gambling**, or exchange related**. The trading behavior of these ** funds will have short-term disturbances to the changes in ETF shares;
However, if there is a continuous and large proportion increase in ETF shares, especially if you are not afraid to chase high risks and continue to subscribe for a large proportion of ** or over-the-counter subscriptions, it can be inferred that it is a medium and long-term fund with a high probability of participating in the trend**.
ChinaAMC previously said that when a concept theme outlet appears in the market, it is relatively broad-based, and the share of many industry theme ETFs will increase significantly, which generally means that the capital consensus is cohesive, and the trend of the stage is clear and sustainable.
Returning to the sharp increase in the share of artificial intelligence AIETF (515070), robotics ETF (562500), and cloud computing 50 ETF (516630) at the beginning of the article, it reflects the recognition of ETF configuration tool attributes and AI trends**.
A single ** board or set off a tide of daily limits, it is difficult for funds to intervene, while the industry theme ETF passively tracks the index, close to the full position, the total proportion of popular stocks in the industry is relatively high, the risk and return characteristics are relatively distinct, and at the same time hold more than 30 constituent stocks, which can diversify the first risk.
The ETF Daily Question column continues to be updated, welcome to pay attention!
Risk Warning: Indices and ETFs are mentioned as examples only and are not recommendations. The above views are for reference only, the market is risky, and investment should be cautious. ETF secondary market** change does not represent a change in actual net value. Data**: Wind, historical index movements are not indicative of product performance.
The risk level of CSI 500 ETF is R3 (medium risk), and the risk level of Artificial Intelligence AIETF, Robot ETF and Cloud Computing 50 ETF** is R4 (medium and high risk), and the specific risk rating results are subject to the rating results provided by **Manager and sales agency; The above ** is ***, and its expected risk and expected return are higher than that of hybrid**, bonds** and money markets**; The above-mentioned ** is an index**, and there may be risks such as tracking error control not reaching the agreed target, the index compiler suspending services, and the trading of constituent securities being suspended or defaulting. In addition, the specific risks of ETF products also include: the risk of deviation between the return of the underlying index and the average return of the market, the risk of fluctuations in the underlying index, etc. Investors should carefully read the legal documents to determine whether they are suitable for their own risk tolerance. **The Manager does not guarantee profitability and does not guarantee a minimum return.