ETF (exchange-traded fund), as a high-profile financial product in the current investment market, has attracted much attention for its development. The ETF industry has entered the fast lane since 2018, and in September 2022, the scale of ETFs exceeded one trillion yuan for the first time, and until September 2023, the asset size of ETF funds is as high as 1.85 trillion yuan. However, as a type of strong and strong products, the ETF market has shown a winner-takes-all situation, which also makes it difficult for other institutions to get a piece of the pie.
Under such circumstances, in order to seize market share, public offering institutions began to reduce management fees, custody fees and securities trading commissions, hoping to attract more investors in this way. This move also triggered a price war without gunpowder, and the head institutions have reduced their fees, hoping to change their status. E Fund took the lead in firing the "first shot" of ETF fee reduction during the year on September 5, 2023, and this move was also followed up by some public offering institutions. The fee reduction is not only to increase the sense of gain of the people, but also to solve the pain point of "the fund makes money, but the people do not make money", and it is also to seize market share.
However, Shen Feng believes that fee reduction is not a means of long-term competition. Although some institutions or products may form a comparative advantage through periodic "price differences", this is not a long-term solution. The development of ETFs should also be committed to differentiated and innovative development guided by the needs of investors. Therefore, it is necessary to ensure the liquidity of the product, reduce the tracking error of the product, achieve the strategic goal of tracking the replication index, provide a better holding experience, and attract medium and long-term capital allocation.
In addition, the China Securities Regulatory Commission's recent request for commission reductions has also triggered a change in the cooperation model between public funds and securities firms. This means that in the long run, the commission reduction will open up a new situation for the development of the brokerage agency business. From this point of view, E Fund will be more favored by brokerages and promote the growth of brokers' holding scale.
However, ETFs still have some problems, such as liquidity issues. The on-exchange liquidity of some ETF products is not ideal, which may affect their ability to grow and attract capital. Therefore, it is necessary to build a more complete ETF 'ecosystem'.
Although there are some challenges and problems in the ETF market, from the perspective of industry insiders, the development prospects of ETFs are still worth looking forward to. The rapid development of index products has become an industry consensus. Therefore, the popularity of ETFs will continue for a long time, and the enthusiasm of fund companies for the layout of ETF products will also continue. It can be said that "those who win ETFs win the world" has gradually become an industry consensus, and fund companies need to invest more energy in product innovation in the future to match the sales target of rapid growth. As a result, ETFs will continue to be one of the most watched products in the financial markets.