The year-end is approaching, and it's time to reflect on the developments in the Exchange-Traded Fund (ETF) sectorAs we dive into the analysis of the standard I bear, termed ETF101—denoting ETFs with a scale exceeding 1 billion yuan and an average daily trading volume surpassing 100 million yuan—we uncover the substantial growth within this sector in a remarkably short period.

Without question, 2024 has emerged as a monumental year for the ETF industry in China, especially for non-money market ETFs, which witnessed nearly a two-fold expansion in just twelve monthsAccompanying this explosive growth is a significant decrease in management fees, contributing to an atmosphere of inclusivity and accessibility for the average investor.

As we usher in 2024, a wave of fund companies has launched ultra-low fee products, heralding the emergence of a new era in China's ETF market, recognizing 2024 as the "Year of Universal Access.” This transition is not merely a financial maneuver but a clear indication that index investing tools are now becoming more approachable and beneficial for a broader spectrum of investors.

This year witnessed a remarkable transformation among non-money market ETFs in China's capital markets

Numbers tell a compelling story: In 2024 alone, 156 new ETFs were established, pushing the total count of non-money market ETFs past the landmark of 1,000, culminating at 1,006. This commendable figure quietly illustrates the growing maturity of the ETF market in China.

Complementing this surge, the scale of non-money market ETFs skyrocketed to over 3.6 trillion yuanThis incessant momentum further manifested in a noteworthy event during the third quarter; for the first time, the market value of index funds held A-shares exceeded that of actively managed funds, thereby establishing index funds as a foundational pillar within the public fund sector on the A-share market.

Tracing the roots of this growth, two primary forces underpin this expansion: over 330 billion yuan from newly launched ETFs and substantial growth from existing ETFsThroughout the year, the continuous accumulation of shares by big institutional players acted as a "visible hand," playing a crucial role in this transformative landscape.

Historically, industry-specific ETFs served as a significant driver for the growth in ETF scale

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For investors, these specialized ETFs offered sharper focus and precision, while broad-based ETFs were considered conventional toolsHowever, in 2024, broad-based ETFs once again took center stage.

Massive capital inflows into broad-based ETFs such as the CSI 300 and the CSI 500 have dramatically altered the overall structure of the industryFirms boasting flagship broad-based ETFs saw a surge in scale, marking a break from the former dominance of the Huaxia FundThe market now resembles a "two giants, one stronghold" scenario, with Everbright Fund and Huaxia growing closer in scale, but Everbright leading the pack with an increase exceeding 350 billion yuan, far outpacing Huaxia and Hua Tai-Po Chai.

However, the value of broad-based ETFs extends beyond just capital inflowsReflecting upon 2024’s new ETF launches, two notable highlights emerged: the aggressive debut of the CSI A50 at the beginning of the year and the remarkable performance of the CSI A500 in the latter half.

Examining the listing of ETFs that meet the “ETF101” criteria throughout 2024, it becomes evident that these two indices play a vital role, with the CSI A500 proving particularly critical for market positioning

For many fund companies, the CSI A500 represents a last-ditch effort to cover gaps in their broad-based offeringsGuotai Fund has valiantly claimed the top position with a staggering 28.7 billion yuan in the CSI A500, establishing itself as a significant contender in this highly competitive landscape.

The rise of established products such as the CSI 300 and 500 certainly symbolized happiness for fund companiesCoupled with substantial market behaviors like the “9·24” scenario, where products like the Sci-Tech 50 and Growth Enterprise Board received noticeable attention, Everbright emerged once again as a major winner.

2024 has also been marked by an unprecedented bull market in bonds, prompting significant advancements in bond ETFs like the BOCI Convertible Bond and Fortis Government Financial Bonds.

Cost reduction has indeed become the dominant theme across China's public fund sector

On one hand, active funds have lowered management fees from 1.5% to 1.2%; on the other hand, products such as ETFs have significantly reduced management fees from 0.5% down to 0.15%. Many investors still perceive that these reduced rates do not quite measure up to U.SETFs, which often generate profits through securities lending, benefiting the fund management companiesIn contrast, in China, such revenues are distributed among all holders, thus a direct comparison may not provide a complete picture of the cost structures.

This collective trend of lowering fees in ETFs signals recognition for the low-fee pathways through which Everbright has championed over the yearsAs we look around at this fast-evolving landscape, Everbright definitively stands out as the predominant supplier of low-fee ETFs, showcasing 49 products with close to 500 billion yuan in assets under managementSuch accomplishments mark it as the unrivaled leader in this arena, although praise is also due to firms like Huatai-Po Chai, Southern Fund, Huaxia Fund, and BOCI, all of which have launched a commendable number of low-cost stock ETFs.

Now, we delve into the much-anticipated review segment, ETF101. My personal criteria for this selection hinges on ETFs surpassing the 1 billion yuan threshold in scale and achieving an average daily turnover exceeding 100 million yuan

This allows for highlighting mainstream products in the market, diverting focus away from merely ranking based on scale and avoiding the misleading notion of "success" that comes solely from heavyweightsThis analysis probes into the vitality of a fund company: can it continue to launch widely accepted ETF products?

Previously, I calculated average yearly turnover, but due to an influx of CSI A500 ETFs by year-end, I've adjusted the focus to average turnover calculated from the past month through December 27. This clarification sets the stage for a thorough investigation.

The comparison of fund companies revealing the greatest number of ETFs meeting the ETF101 criteria uncovers intriguing disparities when aligned against scale rankingsHuaxia Fund still retains its lead, while Everbright follows closelyConversely, Guotai Fund and Guangfa Fund achieve a significantly higher rank in the ETF101 leaderboard than in sheer scale, thanks to their history of developing and issuing many successful sector-specific ETFs.

What has laid the foundation for ETF101's development? A closer look at the timeline of ETF establishments from 2019 to the present reveals that a firm with higher quantities of ETF101 success hinges on consistent innovation in ETF varieties

The years 2019 through 2021 marked peak periods for new ETF releasesThe jury is still out on whether new product diversification can continue post-2022, especially given the strategic resolve demanded of various firms moving forward.

As we gaze towards 2024 and beyond, merely focusing on broad base indices and scale can come across as quite mundaneThe insightful table reveals not only the CSI A50 and CSI A500 but also showcases the remarkable array of new ETFs, including international ETFs, Hong Kong dividend ETFs, and bond ETFs.

This evolution demonstrates that authentic market needs can still carve paths in the predominance of broad-based competition, much like how sector-specific ETFs held sway in previous yearsImportantly, these newly launched ETFs carry the potential for a continued management fee maintenance through the 0.5% mark, stressing their significance to fund companies in terms of profit contributions.

Looking ahead to 2025, our curiosity surrounds more potential newcomers

Three key categories warrant anticipation: firstly, the “20cm” sector—where distinct trading regulations like the 20% limits within Growth Enterprise and Sci-Tech Boards could trigger new trends combining innovation and sectors; secondly, dividends—while hot, they've yet to achieve substantial tactical growth, with indices like CSI 1000 Dividend already on the horizon for 2024; and lastly, Smart Beta—newly introduced indices focusing on free cash flow and growth/value metrics represent exciting opportunities that could prove invaluable.

In sum, the investment landscape serves as a mirror, reflecting societal changes and the unchanging essence of human behaviorThe vigorous development of ETFs in 2024 exemplifies the industry's efficient evolution alongside advancements in investor understandingAt its core, investing represents an act of rational anticipation towards the future across temporal dimensions