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Vanguard gives ETF access to China A-shares

Vanguard Australia has become the first exchange-traded fund (ETF) provider to offer investor access to China A-shares after deciding to include the Asian equities as part of its FTSE Emerging Markets Shares ETF.

Effectively the move means Vanguard has changed the benchmark relating to its Emerging Markets Shares ETF from the FTSE Emerging Index to the FTSE Emerging Markets All Cap China A Inclusion Index.

The new benchmark will allow investor access to some small-cap securities as well.

“This change in benchmark will provide investors with broader diversification and offer more comprehensive exposure to emerging markets shares,” Vanguard Asia-Pacific head of investments, Rodney Comegys said.

Access to China A-shares was made available after Vanguard Investments Australia was granted a Renminbi Qualified Foreign Institutional Investor (RQFII) licence by the China Securities and Regulatory Commission and a quota to invest was approved by the State Administration of Foreign Exchange.

“Australia is one of Vanguard’s three global investment centres for portfolio management and trading, and we are proud to have been the first Australian fund management company granted a RQFII licence,” Comegys said.

“We have received a preliminary quota of RMB10 billion, the largest initial quota ever granted, allowing us to offer Vanguard clients more diversified portfolios that include access to this key market and align with our investment philosophy.”

The Vanguard FTSE Emerging Markets Shares ETF will now include a China A-share portfolio weighting of 5.6 per cent.

“As the first major emerging markets fund to add exposure, to China A-shares, the fund will benefit investors with more diversification, deeper emerging markets exposure, and greater access to the growth potential of Chinese equities,” Vanguard chief executive Bill McNabb said.

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