A50 ETFs - 2822 v 2823

[traineeinvestor]

The CSOP A50 ETF (2822) and the iShares A50 ETF (2823) both purport to track the FTSE China A50 Index.

I would expect there to be similar performance from the two ETFs with the lower expense ratio of 2822 (1.15% v 1.39%) resulting in a small positive divergence over time.

However, the five year total return shows the more expensive 2823 generating a slightly higher return (52.79% v 54.85%). Possibly this is explained by 2823 starting the 5 year period at a slightly larger discount to NAV and that discount narrowing over time? Both currently trade at almost the same small premium to NAV (1.290% v 2.272%).

There have been differences in distributions by two ETFs in almost every year which is strange given they track the same index and having only slight variations in their top ten holdings. Total distributions over the last 5 years are RMB1.34 for 2822 and RMB 1.28 for 2823. What I don't understand is why 2823 only distributed RMB0.11 in 2018 compared to 2822's RMB0.27.

Both ETF's are sufficiently large that liquidity is a non-issue for small investors like me.

Against that background, I have two questions:

1. Given the lower expense ratio, is there any reason not to prefer 2822 over 2823 for my exposure to Chinese equities?

2. Are there alternatives for gaining broad exposure to Chinese equity markets (without remitting funds into the mainland directly)?

Comparison table is here: ETF - ETF Comparison

[freeier]

the story between 2823 and 2822 should be something that is discussed over beer.. maybe jrkob will also have his shares of what goes in and what doesnt..

in short, 2823 is something created entirely by derivatives, underwritten by many of the investment banks and fund managers and financial institutions.. whereas 2822 is created later using new approved means of investment into china (mini QFII i think its called)..

2823 used to be the only retail darling giving you access to china market, and it can trade as high as 10~15% premium to NAV or as low as -10% discount..


the last i heard was a index linked product (Was it ETF or a certificate) that provide access to the China New Sector index, which are more reflective of the growth in IT, tech, robotic, etc.etc.. instead of the XH FTSE-50 index which is still very much banks and financial institutions.. you can probably check tha tout.

[traineeinvestor]

Thanks for the explanation.

The question originated because I've got both 2822 and 2823 (as well as 2800) and can't for the life of me figure out why I purchased both. I think it may have been because 2823 was the only A share ETF when I first invested and when 2822 came around I decided it wasn't worth the cost of switching 2823 into 2822.

In an effort to simply my portfolio I'm revisiting that decision.

[freeier]

if you ask me i will stick to 2822.. unless 2823 is at a very good discount to NAV (which can happen since 2823 is more shortable)... then i might use 2823...

but that said these are quite finance heavy.. which might be a sluggish sector in china for the next few years.. not to say that valuation wise the tech sector is that much cheaper.....

[freeier]

with this new rule, my suspicions is 2823 will be slowly converted into same mechanism as 2822.. to equalize (or cheapen) the cost and remove the unduly 'derivative based' tag placed on 2823...

[freeier]

not related to this thread, but if we look at it, it is also likely one of the steps china using its economics attractiveness (to foreign capital) to side step HK as the avenue for capital to move.. just 3 years after the A share offering in HK ex and now china is allowing direct no quota investment into SH and SZ exchanges.. effort by HKEX now seems wasted...

[freeier]

from the look of it, the only group of north bound user left would be the retailers that do not get to register directly as a foreigner investor...

[shri]

not related to this thread, but if we look at it, it is also likely one of the steps china using its economics attractiveness (to foreign capital) to side step HK as the avenue for capital to move.. just 3 years after the A share offering in HK ex and now china is allowing direct no quota investment into SH and SZ exchanges.. effort by HKEX now seems wasted...

HKEX pricing / ratings drops seems to reflect this.

[makeITcount]

I was in the believe that 2823 is a synthetic holding versus 2822 buys the underlying securities. I personally hold 2822 but the expenses ratio is for both of them unreasonably high IMHO.

[traineeinvestor]

I was in the believe that 2823 is a synthetic holding versus 2822 buys the underlying securities. I personally hold 2822 but the expenses ratio is for both of them unreasonably high IMHO.

Not disagreeing at all on the expense ratio, but for those wanting exposure to PRC equities, which alternatives would you look at?