Analysis of Investment Insights from the Rapid Expansion and Concentration Increase of China's ETF Market

Based on the market background you provided and the latest data I obtained, I will systematically analyze the implications of the rapid expansion and increasing concentration of China’s ETF market for investors.

According to the latest market data, China’s ETF market shows an

trend:

• Total size exceeds 6 trillion yuan
  : China’s ETF size reached
  6.03 trillion yuan
  in 2025, an increase of over
  60%
  from the beginning of the year’s 3.73 trillion yuan [1]
• Rapid expansion in quantity
  : The number of ETFs reached
  1,381
  , an increase of 342 from the beginning of the year [1]
• Leapfrog development
  : It achieved three leaps of 4 trillion, 5 trillion, and 6 trillion yuan within the year, and the interval between each trillion-yuan growth is shortening [1]

:

• There are
  7
  ETFs with a scale of over 100 billion yuan, and
  125
  ETFs with a scale of over 10 billion yuan [1]
• Leading products dominate:
  • Hua Tai Prudence CSI 300 ETF: 427.067 billion yuan
  • E Fund CSI 300 ETF: 303 billion yuan
  • China Asset Management CSI300 ETF: 230.29 billion yuan
  • Harvest CSI300 ETF: 196.7 billion yuan [1]

:

• The number of fund companies with management scale exceeding 100 billion yuan increased from
  12 to 16
  in 2024
  -富国基金 (Fullgoal Fund) rose by
  2 positions
  , 广发基金 (GF Fund) and 国泰基金 (Guotai Fund) each rose by
  1 position
• This reflects the significant
  Matthew Effect
  in the ETF market

• Equity ETFs dominate
  : Scale of 3.84 trillion yuan, accounting for
  64%
  [1]
• Bond ETFs
  : Close to 800 billion yuan
• Cross-border ETFs
  : Close to 1 trillion yuan
• Both hit historical highs [1]

Based on the trend of increasing market concentration, investors should focus on ETF products from

for the following reasons:

• Large-scale ETFs can achieve
  lower management fees
• Operational costs are more fully allocated, which helps to improve net returns
• For example, Hua Tai Prudence CSI 300 ETF has a scale of over 400 billion yuan and significant cost advantages [1]

• Leading products usually have higher
  average daily turnover
• Narrower bid-ask spreads reduce transaction costs
• Lower impact costs for large transactions

• Large-scale funds are more precise in
  replicating indices
• Better able to cope with component stock adjustments and cash subscriptions/redemptions
• Historical data shows that tracking errors of leading ETFs are usually controlled within
  0.1%
  [2]

According to international best practices for ETF investment [2,3], it is recommended to evaluate ETF products from the following dimensions:

• Prioritize ETF products with over 5 billion yuan
• Avoid small-scale ETFs (<500 million yuan) as they face liquidation risk
• Trillion-yuan products have obvious advantages in liquidity and cost

• Average daily trading volume
  >10 million yuan
  is preferred
• Ensure liquidity in secondary market trading
• Reduce slippage losses when buying or selling

• Management fees for equity ETFs are usually between
  0.15%-0.5%
• Products with obvious scale effects have lower fees
• In long-term investments, fee differences have a significant impact on compound interest effects

• Choose products with annualized tracking error
  <0.5%
• Reflects the fund manager’s operational capabilities
• Historical data can be viewed through regular fund reports

• Pay attention to the premium/discount of ETFs in the secondary market
• The ideal state is a premium/discount rate within
  ±0.2%
• Excessively high premiums/discounts may present arbitrage opportunities or liquidity risks

With the rapid increase in the number of ETFs (342 added within the year) [1], some products may face

:

• Avoid chasing small-scale ETFs of hot themes
• Some newly issued ETFs may see rapid scale shrinkage after the marketing period
• It is recommended to choose products that have been
  in existence for >3 years
  and tested by the market

According to modern portfolio theory, it is recommended to adopt the

strategy:

:

• Choose
  broad-based index ETFs
  as core positions
• Recommended targets:
  • CSI 300 ETF (e.g., leading products from Hua Tai Prudence, E Fund) [1]
  • CSI 500 ETF (e.g., Southern CSI 500 ETF with scale over 100 billion yuan) [1]
  • ChiNext ETF (e.g., E Fund ChiNext ETF) [1]

:

• Industry theme ETFs
  : New energy, semiconductors, AI, etc.
• Smart Beta ETFs
  : Dividend, value, low volatility, etc.
• Cross-border ETFs
  : Nasdaq 100, S&P 500, etc. to diversify country risks

• When leading fund companies launch new products, there is often a
  marketing period premium
• Can be关注ed in the early listing stage, but need to evaluate long-term investment value
• Avoid chasing high due to short-term marketing impulses

• As competition intensifies, leading companies may
  reduce fees to attract customers
• Regularly compare fee levels of similar products
• Long-term holders are more sensitive to fees and can consider switching to products with lower fees

• Large capital investors can utilize the
  liquidity advantages
  of leading ETFs
• Obtain better transaction prices for large transactions
• Reduce market impact costs

Although passive investment is the general trend,

are still needed:

:

• Asset allocation decisions
  : Proportion of stocks, bonds, commodities
• Geographical allocation
  : Weight of A-shares, Hong Kong stocks, US stocks
• Style allocation
  : Growth vs value, large-cap vs small-cap

:

• Efficiently execute the above allocation decisions through ETFs
• Reduce stock selection risks and obtain Beta returns
• Save research costs and management fees

Market expansion brings

opportunities:

• Actively managed ETFs
  : Combine active management and ETF trading advantages
• Leveraged/inverse ETFs
  : Short-term hedging tools (need to be used with caution)
• ESG-themed ETFs
  : In line with sustainable development investment philosophy
• Factor investment ETFs
  : Capture specific risk premiums

• Excessively high proportion of leading products may lead to
  increased systematic risk
• Should be moderately diversified to avoid over-concentration in a single fund company
• It is recommended to choose products from
  2-3 leading fund companies
  for diversification

• Some small and medium-sized ETFs have
  liquidity shortages
• Need to关注 trading volume when making large transactions to avoid excessive impact costs
• If necessary, choose the
  primary market subscription/redemption
  method

• Even leading products have
  tracking errors
• Regularly check the deviation between ETFs and benchmark indices
• Beware of products with持续 high tracking errors

• As competition intensifies, fees may continue to decline
• For fund companies, need to
  offset price declines with volume
• Investors can benefit from this, but need to关注 whether fee reductions affect service quality

Based on the above analysis, the following practical recommendations are provided for ordinary investors:

1. Simplify selection
   : Focus on 3-5 broad-based index ETFs
2. Recommended allocation
   :
   • CSI 300 ETF (40%): Hua Tai Prudence or E Fund
   • CSI 500 ETF (30%): Southern CSI 500 ETF
   • ChiNext ETF (20%): E Fund ChiNext ETF
   • Cross-border ETF (10%): Nasdaq 100 or S&P 500
3. Dollar-Cost Averaging (DCA)
   : Reduce timing risk
4. Long-term holding
   : Holding period >3 years to fully exert the compound interest effect

1. Core-Satellite strategy
   : Broad-based + theme + cross-border
2. Customized allocation
   : Adjust weights according to risk preferences
3. Liquidity management
   : Build positions in batches for large transactions to reduce impact costs
4. Tax optimization
   : Utilize the tax efficiency advantages of ETFs
5. Regular rebalancing
   : Adjust allocation proportions quarterly or semi-annually

1. In-depth research
   : Establish an ETF evaluation system
2. Customized baskets
   : Build customized investment portfolios using ETFs
3. Liquidity management
   : Fully utilize the liquidity advantages of leading ETFs
4. Hedging tools
   : Use inverse ETFs to hedge downside risks
5. Dynamic adjustment
   : Flexibly adjust allocation according to market environment

China’s ETF market still has

:

• Comparison with the US market
  : US ETF scale exceeds 8 trillion USD, and China still has more than 10 times growth space
• Penetration rate increase
  : Currently, the proportion of ETFs in the A-share market is still low and is expected to continue to increase in the future
• Product innovation
  : Actively managed ETFs, option ETFs and other products will enrich the market
• Investor education
  : As investors’ awareness improves, ETF allocation demand will continue to grow

: The rapid expansion and increasing concentration of China’s ETF market are . Investors should follow this trend, prioritize high-quality products from leading fund companies, adopt scientific allocation strategies, and fully utilize the advantages of ETFs to achieve long-term stable investment returns.

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[0] Jinling API Data - Contains China’s ETF market size, leading product size, fund company rankings and other data

[1] Ca联社 - 《China ETF Scale Reaches 6.03 Trillion Yuan to Hit New Historical High, Up Over 60% This Year》(https://hk.finance.yahoo.com/news/中國etf規模達6-03萬億再創歷史新高-年內增超六成-005014595.html)

[2] Investopedia - 《How to Choose an ETF》(https://www.investopedia.com/articles/exchangetradedfunds/08/etf-choose-best.asp)

[3] Investopedia - 《How To Evaluate ETF Performance》(https://www.investopedia.com/articles/etfs-mutual-funds/042616/how-evaluate-etf-performance.asp)