E Fund A50 (Stock Code: 3111) offers exposure to leading A-share companies listed on the Shanghai and Shenzhen exchanges, providing a new tool for broad market investing.

E Fund (Hong Kong) has launched another ETF—E Fund (Hong Kong) MSCI China A50 Connect ETF (Stock Code: 3111)—which officially listed on December 14, 2021. This product offers exposure to leading A-share companies listed on the Shanghai and Shenzhen exchanges, adding a new tool for broad market investing! What are the key features of this new product? Let’s take a closer look.

I. Sector-neutral approach, capturing industry leaders

Investors familiar with ETFs understand that an ETF’s investment value largely hinges on the underlying index it tracks. The E Fund MSCI China A50 Connect ETF tracks the MSCI China A50 Connect Index, which employs an innovative sector-neutral methodology to select leading companies across major sectors, enabling investors to efficiently track China’s economic frontrunners. Among its top 10 holdings, CATL ranks first and Kweichow Moutai second. The index also includes established powerhouses such as China Merchants Bank and Wuliangye, alongside new-economy leaders like LONGi Green Energy, Wanhua Chemical, Luxshare Precision, BYD, and China Tourism Group Duty Free Corporation—effectively balancing exposure between the 'Ning portfolio' and the 'Mao index.'

Top 10 Holdings of the MSCI China A50 Connect Index

Source: Wind, MSCI, as of March 31, 2022; not a recommendation for any individual stock.

II. Broad representation of the A-share market, unlocking China’s growth opportunities

According to IMF data, in 2020, China was the only major economy to achieve positive GDP growth, expanding by 2.3%, while the U.S. contracted by 3.5%, the U.K. 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%. In 2021, China’s GDP growth came in at 8.1%, significantly outpacing most developed economies in Europe and North America. Over the long term, economic growth remains a key driver of China’s A-share market performance.

The MSCI China A50 Connect Index adopts a sector-neutral design philosophy, avoiding the pitfalls of conventional broad-based indices that rely solely on market-capitalization weighting—pitfalls such as excessive weightings in traditional-economy firms and inadequate or missing representation in certain sectors. Its diversified sector allocation enables the index to more evenly represent the broad Chinese A-share market and thus capture the full spectrum of opportunities in China’s economy. As a result, this product allows investors to efficiently track sector leaders across China’s economy and capitalize on the growth potential of the world’s second-largest economy.

III. Strong new-economy momentum, filling gaps in tech sectors

As China’s economy undergoes transformation and upgrading, sectors aligned with high-quality development—such as technological innovation, advanced manufacturing, biopharmaceuticals, and carbon neutrality—are expected to receive sustained policy support and represent areas of higher long-term certainty in the A-share market. From an index perspective, despite being a large-cap benchmark, the MSCI China A50 Connect Index demonstrates strong new-economy characteristics with heavier weightings in technology-related sectors. By industry classification, the index effectively addresses prior gaps in key growth segments, including electric vehicles, photovoltaics, and pharmaceuticals.

IV. Rapid style rotation—E Fund A50 enables one-click portfolio allocation

Looking back at 2021 data, market styles and sector themes rotated rapidly. Industry participants widely believe that as economic growth faces increasing pressure, shifts between high- and low-performing assets and rapid sector rotation could become the norm. With four months of 2022 already behind us, planning for the future must now take priority. From a long-term strategic perspective, regardless of which style or sector investors favor, E Fund CSI A50 ETF offers a one-click solution to meet core asset allocation needs.

(Edited by Eric Zheng)

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