Vanguard Australia has joined the crop of exchange traded fund providers targeting wider markets expanding one of its indices to offer exposure to China A-shares after having been granted regulatory approval by Chinese authorities.
The fund manager will expand its Vanguard FTSE Emerging Markets Shares ETF (VGE) moving it from the FTSE Emerging Index, which contains large and mid-cap securities, to the FTSE Emerging Markets All Cap China A Inclusion Index, which also includes China A-shares and small-cap securities.
Vanguard Head of Investments Asia-Pacific, Rodney Comegys said this would align the local offering with that of the US-listed Vanguard FTSE Emerging Markets ETF into which VGE invests.
The expansion was made possible after the China Securities and Regulatory Commission (CSRC) and State Administration of Foreign Exchange (SAFE) granted Vanguard, through Vanguard Investments Australia, a Renminbi Qualified Foreign Institutional Investor (RQFII) licence and SAFE approved a quota to invest.
According to Vanguard the China A-shares would have a weighting around 5.6 per cent and the benchmark change will take place over several months to ensure an orderly and cost effective transition.
