E-Fangda A50 (stock code: 3111) covers leading A-shares in Shanghai and Shenzhen, adding new instruments to large-scale investment

The E-Fonda (Hong Kong) ETF is one more city. E-Fangda (Hong Kong) MSCI China A50 Connected ETF (stock code: 3111) was officially listed on December 14, 2021. The product covers leading A-share companies in Shanghai and Shenzhen, and new tools have been added to large-scale investment! So what are the characteristics of this new product, let's take a look.

1. Industry neutral, including leaders

Investors familiar with ETFs know that the investment value of an ETF depends largely on the value of the tracking index. Yifangda A50 tracks the MSCI China A50 Connectivity Index. Judging from the compilation method, the index uses industry-neutral innovative methods to select leading companies in various industries, so that investors can easily track China's economic leaders. Looking at the top ten weighted stocks, the Ningde era ranked first, and Kweichow Moutai ranked second. In addition, it also included “established powerhouses” such as China Merchants Bank and Wuliangye, as well as “new economic leaders” such as Longji, Wanhua Chemical, Lixun Precision, BYD, and China China Insurance, etc., achieving a balance between the “Ning Group” and the “Mao Index.”

Top ten weighted stocks in the MSCI China A50 Connectivity Index

Data source: Wind, MSCI, as of 2022/03/31; not recommended as any individual stock.

2. Representing a broad range of A-share markets and helping to embrace China's opportunities

According to IMF data, in 2020, China's GDP grew only positively among the world's major economies, growing 2.3%, while the US grew by 3.5%, the United Kingdom by 9.9%, France by 8.2%, Germany by 4.9%, Japan by 4.8%, Canada by 5.4%, India by 8%, Russia by 3.1%, and Brazil by 4.1%. Meanwhile, China's GDP growth rate for 2021 has just been released, at 8.1%, significantly ahead of most developed countries in Europe and the US. However, in the long run, the economic growth rate is still an important driving factor for A-shares.

The MSCI China A50 Connectivity Index uses industry-neutral design ideas to avoid the problems that the mainstream broad-based index simply uses market capitalization weighting methods, leading to excessive share of traditional economic companies and insufficient representation or even lack of representation in some industries. The decentralized sector allocation enables the index to represent a broad range of China's A-share markets in a more balanced manner, thus representing the overall market opportunities of the Chinese economy. Therefore, the product allows investors to easily track the leaders in various fields of the Chinese economy and seize the growth opportunities of the world's second-largest economy.

3. The new economy is full of momentum, complementing the science and technology track

Along with the transformation and upgrading of China's economy, fields such as scientific and technological innovation, high-end manufacturing, biomedicine, and carbon neutrality that meet the needs of high-quality development and represent the direction of the new economic development are expected to continue to receive strong policy support and become a sector with higher long-term certainty in the A-share market. However, judging from the characteristics of the index, as a broad-market index, this index also shows the characteristic that “the new economy is full of momentum, and the science and technology track accounts for a heavier share.” Judging from the industry classification, the index makes up for shortcomings in the technology track, such as the gold track for new energy vehicles, photovoltaics, pharmaceuticals, etc.

4. Style quick rotation, E-Fangda A50 assists with one-click configuration

Looking back at 2021 data, market styles and industry themes are rapidly rotating, yet the industry generally believes that as economic growth pressure increases, market changes between high and low levels and rapid rotation of the industry may become the norm. Four months have passed since 2022, and the future layout also needs to be put on the agenda. Standing at the moment with a long-term layout, for investors, no matter what style or industry they are optimistic about, the E-Fonda A50 can meet core asset allocation requirements with one click.

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