This year, the ETF market has continued to be hot, with a large amount of capital entering the market through various channels. Wind data shows that as of May 8th, the total net inflow of funds into the ETF market since the beginning of the year has reached 351.19 billion yuan, which is more than 12 times the net inflow of 26.219 billion yuan compared to the same period last year.

Overall, broad-based ETFs have been favored by capital, especially those tracking the CSI 300 Index. Behind this significant increase in holdings, there is a substantial contribution from the "national team." By the end of the first quarter, Central Huijin increased its holdings in the top six ETF products by 123 billion shares. On the other hand, behind the lively ETF market, "metabolism" is also accelerating. Reporters have noticed that recently, many leading players are making intensive adjustments to the liquidity service providers of ETF products.

Broad-based ETFs are "money magnets"

First Financial Daily reporters, through the analysis of capital flow data, found that overall, broad-based ETFs have become the biggest winners, especially those tracking the CSI 300 Index, which are highly favored. As the main force of "money attraction" this year, these products have seen a net inflow of 261.627 billion yuan so far this year.

Among them, the most "money-attracting" Easy Fund CSI 300 ETF has seen a net inflow exceeding 82.3 billion yuan. As of May 8th, the fund's share reached 78.896 billion shares, and the net asset value rose to 139.765 billion yuan. At the end of last year, the fund's shares were less than 30 billion shares.

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In addition, similar situations are seen with Huatai-PineBridge CSI 300 ETF, China AMC CSI 300 ETF, and Harvest CSI 300 ETF, with net inflows of funds all above 50 billion yuan. The Shanghai Stock Exchange 50 Index, which also represents large-cap blue chips, is also a target for capital grabbing. For example, China AMC Shanghai Stock Exchange 50 ETF has received a net inflow of 26.45 billion yuan. With a wave of subscriptions, the latest fund size of these products has reached a high since its establishment.

Which funds are buying large-cap broad-based ETFs? A large amount of "ammunition" may be related to the "national team players." In the second half of last year, Central Huijin Investment Co., Ltd. (hereinafter referred to as "Central Huijin") significantly increased its holdings in broad-based products such as the CSI 300 and the Shanghai Stock Exchange 50.

According to First Financial Daily's combination of the latest two period data, the CSI 300 ETF products are its preferred targets. For example, Central Huijin bought more than 6.146 billion shares of Easy Fund CSI 300 ETF in the second half of last year, with a holding ratio of 21.09%. The first quarter report this year shows that Central Huijin once again subscribed to 45.706 billion shares of this product, and so far, Central Huijin holds 51.852 billion shares, with a holding ratio of 65.74%.

In the first quarter of this year, Central Huijin also successively net subscribed to Huatai-PineBridge CSI 300 ETF (26.356 billion shares), China AMC CSI 300 ETF (16.993 billion shares), China AMC Shanghai Stock Exchange 50 ETF (15.867 billion shares), Harvest CSI 300 ETF (15.604 billion shares), and Southern Zhongzheng 500 ETF (2.465 billion shares).

A simple calculation shows that the above top six ETF products were increased by 123 billion shares by Central Huijin in the first quarter of this year. First Financial Daily roughly estimates that the amount of Central Huijin's increase in this round may be around 300 billion yuan based on the transaction price range of each product in the first quarter of this year; from the unit net value at the end of the first quarter, the scale of the held fund exceeds 430 billion yuan.Spotlight on ETF "Lifeline"

As the market continues to fluctuate, in addition to the broad-based index being highly favored, many funds have also turned their attention to small and medium-sized index funds. ETF products tracking the CSI 500 and CSI 1000 indices have seen net inflows of 42.943 billion yuan and 24.511 billion yuan respectively within the year. Furthermore, ETF products tracking the ChiNext Index have also seen net inflows exceeding 18 billion yuan.

In addition, gold commodity ETFs with hedging attributes have also been popular products this year. Benefiting from the rise in gold prices, the net value of gold ETFs has seen a general increase, attracting funds to continue to enter the market. Data shows that as of May 8th, 18 gold ETFs have "attracted gold" of 12.747 billion yuan within the year.

On the other hand, funds are gradually withdrawing from sectors such as the STAR 100, semiconductors, chips, and the internet. Wind data shows that as of May 8th, the 10 ETFs tracking the STAR 100 index have a total net outflow of 9.055 billion yuan; while the funds tracking the four major chip indices have seen a capital outflow of 6.283 billion yuan.

In fact, in the past two years, the development of ETFs has shown a "booming" trend, with a large amount of capital entering through this channel, and various fund companies are also scrambling to establish new products. Wind data shows that as of May 8th, there are 953 ETF products in the market, with a total share of 2.49 trillion yuan, an increase of 45.61% compared to last year's 1.71 trillion yuan.

With the expansion of the ETF market, fund companies are paying more and more attention to the liquidity quality of ETFs. Since April, more than 10 fund companies have announced in a concentrated manner that they have terminated some securities companies to provide liquidity services for their ETF products. In the industry, this is seen as an adjustment made by various fund companies to adapt to new liquidity service regulations.

For example, on May 9th, GF Fund announced that according to the "Shenzhen Stock Exchange Securities Investment Fund Business Guidelines No. 2 - Liquidity Services" and other relevant regulations, from May 9th, 2024, the company will terminate the liquidity services provided by Donghai Securities Co., Ltd. for three of its products, including the GF CSI All-Share Pharmaceutical and Health ETF.

The "Shenzhen Stock Exchange Securities Investment Fund Business Guidelines No. 2 - Liquidity Services" was released in December last year. Article 7 of the regulation stipulates six situations in which fund managers apply to the Shenzhen Stock Exchange to terminate the liquidity service provider's provision of liquidity services for the relevant fund.

"Assets can only generate value when they are in motion. As open-end funds that can be traded on the exchange, liquidity is crucial for ETFs," said an insider from a fund company with several ETFs that have terminated liquidity service providers, in communication with a reporter. Unlike stock market market makers, ETF market makers (liquidity providers) can "transport" liquidity from the stock spot market, index derivatives market, and ETF derivatives market to the ETF market through cross-market arbitrage trading.

The insider stated that the ETF market has been thriving in recent years, but it also shows a trend of polarization. Some ETFs continue to be favored, but many "mini" ETFs face the risk of liquidation. The increase and decrease of liquidity service providers have thus become normalized, consistent with the overall development trend of the industry.The reporter has observed that this year, many product ETFs have experienced a continuous reduction in scale, even triggering the "alarm" for liquidation. Data indicates that among the 904 products with available data, 144 ETFs have a net asset value below 50 million yuan, accounting for nearly 16%.

According to incomplete statistics, since 2024, at least 93 fund products have issued "promptive announcements for continuous values below 50 million yuan," with 36 of them being ETF products, which is over one-third of the total. Among these, 15 products are newly launched within less than a year, such as the ICBC CSI 100 ETF, which was established on December 22, 2023.