Category: Money tips Release Date: 2006-10-10
China Fund ETF column
(China Fund, the Shanghai 50ETF, medium and small plates ETF fund manager Fang-jun)
ETF is traded within the exchange, if investors have a lot of parts need to sell, it may not so much on the market amount to take over, it may cause the fund to sell the price will be lower than the net value of the case, which is ETF's liquidity problems. Studies have shown that: the daily turnover of ETF liquidity is not a good assessment methods. The reasons are the following three points:
(1) As the ETF beneficiary certificates are produced through in-kind purchase, the total size is not fixed, so there is no issue of the so-called chips. (2) ETF not only in secondary market transactions, but also may at any time in the primary market for physical purchase and redemption, as long as the mobility component of this package is good, easy on the secondary market trading of the ETF can be the flow of waves caused by the effect of sex. Therefore, in assessing when the ETF liquidity, ETF liquidity of the underlying stock but even more important. (3) The ETF have taken part in the presence of brokers in the market demand is insufficient, it can broker to market manipulation by participating in an active market, in the market supply is insufficient, then the participation of brokers or investors through the physical creation of a mechanism to create a more ETF beneficiary certificates.
Institutional investors in the face of lack of liquidity, can also be obtained through in-kind redemption of a package of constituent stocks and then sold in the secondary market. In this way regardless of the complexity of the transaction costs are higher than the direct sale of beneficiary certificates ETF, the ETF an active secondary market trading is the liquidity problems the best way, how to enhance secondary market liquidity of ETF then?
(1) open a zero intraday stock trading. Zero in many markets only in the after-hours trading shares available for purchase and redemption of ETF's mechanism, it was unable to conduct regular stock trading will result in a zero-purchase or redemption of ETF units fold relative premium is poor, the Hong Kong market to allow zero shares In intraday trading, the ETF can price the difference between its net worth to a minimum.
(2) open more related products. On international experience analysis, product line is complete, it will seriously affect the ETF high and low trading volume in the secondary market. The current global asset size among the top ten of the ETFs, almost every file has a corresponding ETF futures and options instruments (only Egypt and snow MSCI Far East index fund has no corresponding futures instruments), which is 10 files and all of ETFs included in the global trading volume of ETFs among the top 20 files, showing their ETF-related derivatives transactions.
(3) to develop cross-industry co-operation. ETF is one key to success in overseas is its cross-industry cooperation, such as brokerage to ETF the subject to develop the relevant linked products, equity linked notes, warrants, etc.; the insurance industry launched an investment-type insurance policies linked ETF; Bank launched on a regular basis and to specify use of fixed investment in ETF Trust & Investment ETF; open-end fund cash position to invest in ETF. With the ETF trading volume is getting bigger, the assets continue to increase the size of the top business opportunities will increase, and with the size of ETF assets, the formation of a virtuous cycle of investment people, will also have more opportunity to learn about this product ETF .
(4) to expand foreign participation. From the current global trend, the index investment has gradually become a national fund managers in the face of the world's tens of thousands of investment targets, the most simple and direct investment. In order to fund market in Europe and the United States the most developed regions, for example, the United States has more than Jiucheng equity fund managers to MSCI index for the reference index, the European side the same data as high as 60% or more, generally speaking, the more able to represent the local market index conditions, foreign capital ownership positions will increase. Recognized as the most active global transactions, the highest turnover rate of ETF --- "Cupid" point of view, it is not only in the U.S. Stock Exchange, while still in electronic trading systems (ECN) Ireland (Island) and islands (Archipelago) traded on the trading system. "Cupid" in listed, NASDAQ-100 Index due to the composition of a very high proportion of technology stocks, it soon attracted the eyes of investors, and later while the Internet bubble burst, but "Kewpie" to multi-country listing approach funds to allow more countries willing to participate in its trading, trading volume increased rather than decreased. (CIS)
