With the continuous diversification of cross-border ETF products, more and more investors choose to use ETFs to deploy in overseas markets.
On Monday, another ETF that invests in an offshore index was listed. As the first Dow Jones index ETF product in China, Penghua Dow Jones Industrial Average ETF (hereinafter referred to as "Dow Jones ETF"), a subsidiary of Penghua Fund, has been approved and officially announced to be issued on December 25.
According to the reporter, the ETF will track the Dow Jones Industrial Average after listing, and the index selects the 30 most representative large listed companies in the United States as constituent stocks, which are compiled through price weighting, and the companies with higher stock prices have a greater impact on the index.
ETFs have become an important tool for investors to "go global", just this month, a number of cross-border ETFs have been launched, such as on December 13, Huatai Pineapple Fund reported Huatai Pineapple CSOP Saudi Arabia Exchange Traded Index Securities Investment Fund (QDII), taking the first step of direct investment in the Saudi market for mainland public offerings. At the beginning of the month, Huatai Pinebridge Southeast Asia Technology ETF was listed, which is also the first fund in China that can invest in the pan-Southeast Asian technology industry.
The first Dow Jones ETF is on the way
According to reports, the upcoming Dow Jones ETF benchmark index is the Dow Jones Industrial Average (DJI, Dow Jones), which was established in 1896 and is one of the oldest stock market indices in the United States, and is known as the barometer of the U.S. stock market by investors.
In terms of index positioning, the Dow Jones is compiled to include companies with large market capitalization and high influence in different industries to provide comprehensive market insights and enable investors to understand the overall health of the U.S. domestic economy; 。
Why Penghua Foundation chose to issue the Dow Jones ETF at this time can also be seen from the recent performance of the U.S. stock market. The Federal Reserve recently concluded its last policy meeting of 2023 with the official announcement of the end of interest rate hikes. Not only that, but the median FOMC forecast also shows three rate cuts of 25 basis points next year. As soon as the news was confirmed, the U.S. stock market quickly rose, and the Dow Jones Industrial Average rose 1.4% local time on December 13 to close at 37,090 points, a record high.
From the perspective of future investment, the decision of the Federal Reserve meeting has brought good investment opportunities in U.S. stocks. Penghua Fund believes that there are obvious investment opportunities and long-term investment value in the current Dow Jones. First of all, since the 80s of the last century, the components of the Dow Jones have been changing with the structural transformation of the US economy, and the proportion of "new economy" industries is gradually rising, and the leading companies in the consumer, financial and innovation technology industries are consolidating their leading positions in the index.
Historically, the index's allocation value is highlighted. Specifically, the Dow has been relatively solid since 2000, showing a steady upward trend overall, and can quickly recover when there is a retracement. Wind data shows that as of December 2023, the cumulative increase since 2010 has reached 342.1%, basically outperforming all common international broad-based indices. And from the absolute level of historical valuation, as of the close of trading on December 3, 2023, the dynamic P/E of the Dow Jones in the past 12 months was 17.14, which is in a volatile and rising stage.
In addition, Penghua Fund also pointed out that the rise of the Dow Jones Industrial Index was mainly driven by earnings growth. In the 3.5-fold increase since 2000, the contribution of earnings expansion has reached 361%, showing the obvious stability and value characteristics of the Dow. At the same time, the Dow's sector composition is balanced, dominated by mature industries, balanced distribution, and also has a large scale of market participants and daily trading volume, investors can relatively easily enter and exit the constituent stock positions, providing style support for the higher liquidity level of the index, and has good investment value in the long run.
Cross-border ETFs provide investors with diversified investment needs
With the increasing globalization of the world economy, investors are seeking a wider range of investment opportunities, and the emergence of cross-border ETFs has provided investors with a convenient way to allocate assets on a global scale, and has also become a key tool to connect different markets and economies.
In addition to the above-mentioned Dow Jones ETF, Huatai Pinebridge Southeast Asia Technology ETF was also launched at the beginning of the month, with constituent stocks covering the top 30 technology leaders in India, Indonesia, Malaysia, Singapore, Thailand and Vietnam.
In the middle of the month, Huatai Pineapple Fund also reported the Huatai Pineapple CSOP Saudi Arabia ETF, which tracks the FTSE Saudi Arabia Index, which comprehensively covers Saudi Arabia's financial, basic materials, energy and telecommunications industries, providing investors with the opportunity to track the performance of more than 50 leading large and medium-sized companies listed on the Saudi Exchange.
Overall, the variety of cross-border ETF products is constantly enriching, and domestic investors are choosing more and more. Wind data shows that as of December 21, there were 106 cross-border ETFs in the whole market, and the total share of the year has reached 432.014 billion, an increase of 154.780 billion compared with the beginning of the year, an increase of more than 55%.
A large public fund market person told reporters that the flexibility and high liquidity of cross-border ETFs enable investors to invest in different markets around the world and enjoy the dividends of global economic growth. Talking about its advantages, she pointed out that cross-border ETFs have the characteristics of global investment opportunities, low cost and high liquidity, industry themes and innovative investments, as well as currency diversification and risk management, which allows investors to manage their portfolios more flexibly and achieve better asset allocation and risk control. By choosing cross-border ETFs covering different industries, regions and asset classes, investors can achieve broader investment diversification and improve the resilience of the overall portfolio.
In addition, the pace of globalization of domestic public funds is accelerating. Another market participant pointed out that "bringing in" and "going out" have become the key words of current economic development. In the past 30 years, the wealth of domestic residents has increased substantially, driving the two-way demand for "bringing in" and "going out". In the future, with the further opening up of the global capital market, China will play a more active role in the global capital market, providing more choices and possibilities for international investment. For domestic investors, it provides a broader investment choice. This dynamic balance will continue to evolve in the exchange and cooperation between China and the global economy, and promote a more open and prosperous global capital market.
This article originated from the Financial Associated Press