This week, Wall Street welcomed yet another ETF first from Direxion Investments.
A-Shares 101
For a quick recap, China A-Shares were historically very difficult to invest in due to Chinese government regulations. Now, however, institutional investors can apply for the Qualified Foreign Institutional Investor (QFII) program, which allows approved foreign institutional investors to access the A-Share market. A handful of issuers have been granted this status, allowing them to provide A-Shares exposure in the low-cost and efficient ETF wrapper.
Shorting A-Shares
On Wednesday, the Daily CSI 300 China A Share Bear 1x Shares (CHAD ) began trading, making it the first ETF to offer inverse exposure to China A-Shares. The fund offers -1x exposure to the popular CSI 300 Index, which consists of 300 of the largest and most liquid A-Share stocks listed on the Shenzen or Shanghai Stock Exchange.
CHAD is Direxion’s second A-Shares targeted ETF; in April of this year, the firm introduced the Daily CSI 300 China A Share Bull 2x Shares (CHAU ), which offers 2x exposure to the same underlying index.
Commenting on the launch, President of Direxion Investments Brian Jacobs noted, “China A-shares have become very popular with U.S. investors and traders because they recently became accessible through ETFs. But there are those who may want to hedge China A-share exposure, and this new ETF offers a way for traders with a contrarian view of this asset category to seek protection or profit.”
CHAD charges a net expense ratio of 0.80%
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Disclosure: No positions at time of writing.