Chinese asset manager Yinhua Fund Management has launched a new ETF providing exposure to innovative China A-share companies operating in certain technology-related industries.
A-shares are Mainland-listed, renminbi-denominated stocks that trade on either the Shanghai and Shenzhen stock exchanges.
The Yinhua CSI Research Innovation 100 ETF (159987 CH) has listed on Shenzhen Stock Exchange (SZSE) and comes with a management fee of 0.30%.
The fund tracks the CSI Innovation 100 Index which selects its constituents from the parent CSI All Share Index, a representation of the total China A-share market.
A-shares are Mainland-listed, renminbi-denominated stocks that trade on either the Shanghai and Shenzhen stock exchanges. The parent index includes all China A-shares that have been trading for at least three months.
The methodology uses the CSI Industry Classification System (CICS) to select firms from technology-related industries including information technology, telecommunication services, aerospace & defense, healthcare, automobiles & components, amongst others.
Stocks that rank in the bottom 20% by three-month and twelve-month liquidity are excluded. Any company that has an average R&D intensity (research and development expenditure dividend by sales) over the past two years that is less than 5% is also removed.
The remaining stocks are then ranked according to three equally-weighted factors (market capitalization, revenue, and gross margin). The index selects 100 securities from amongst the highest-ranked stocks while adhering to sector constraints.
Constituents are weighted by float-adjusted market capitalization subject to a single stock cap of 10%. Reconstitution and rebalancing occur semi-annually.
The index is presently primarily exposed to three sectors: information technology (39.7%), healthcare (24.9%), and industrials (23.4%) with lesser weights in telecommunication services (7.5%) and consumer discretionary (3.8%).
Jiangsu Hengrui Medicine is the largest constituent with a weight of 12.0%, followed by Hangzhou Hikvision Digital Technology (5.3%), Sany Heavy Industry (3.8%), East Money Information (3.3%), and ZTE (3.3%).