As we approach 2025, the Exchange-Traded Fund (ETF) market is on the cusp of seeing the introduction of a new broad-based indexAccording to reports from Chinese financial journalists, index companies are preparing to launch a comprehensive index for the Sci-Tech Innovation Board, which will follow in the footsteps of the existing Sci-Tech 50, Sci-Tech 100, and Sci-Tech 200 indicesThis development signals a significant evolution in the investment landscape, particularly for fund companies that are eyeing the burgeoning opportunities in the ETF space.

In recent years, broad-based ETFs have emerged as powerful instruments for capital raising in the marketA wave of large-scale products has recently hit the shelves, and this new index is poised to become a sought-after asset among fund management firmsMany public fund managers are already gearing up to align themselves with this comprehensive index, anxiously looking to secure a place in the inaugural list of ETFs tied to this newly minted Sci-Tech Index.

The forthcoming broad-based index is edging closer to reality

Insiders reveal that index companies are actively working on creating the Sci-Tech Board Comprehensive Index as part of a multifaceted index framework that includes the Sci-Tech 50, 100, and 200 indicesThe goal is to formulate a more comprehensive index system for the Sci-Tech Board.

It’s no secret that broad-based ETFs have always been a fiercely competitive arena for fund companiesCurrent reports indicate that multiple asset management firms are monitoring the progress of the comprehensive index with keen interestThis intense competition highlights the commitment of these companies to harness the potential of an evolving market environment.

A key reason behind this rush for early positioning is the heightened regulatory focus on broad-based indicesRecent policy changes, highlighted by the new "National Nine Articles," directly support the establishment of expedited approval channels for ETFs, thus promoting index-based investments

• Yen Surges as Dollar Faces Christmas Assault
• Bank Fund Fees Under Scrutiny
• SMIC vs. Cambricon: A Tale of Two Chinese Chip Stocks
• Gold Prices Soar as Gold Funds Shine
• How to Engage in International Futures Trading?

Such regulatory backing provides a compelling incentive for asset management companies to position themselves advantageously within the scope of broad-based ETFs.

Market trends over the past two years underline the exponential growth of core broad-based index ETFsThis surge reflects not just a shift in investor trading habits, but also underscores the increasing difficulty of securing alpha returns that exceed those of broad market indicesAs a result, a growing number of fund companies are prioritizing investments in core broad-based ETFs to adapt to the dynamic nature of market demands.

Sources within the industry note that leading ETFs, such as the CSI 300 ETF and others, exhibit a "winner-takes-all" scenario in the marketplaceFor fund companies, venturing into the acquisition of shares in the CSI 300 ETF or the CSI 500 ETF represents significant challenges due to established competition

Companies eager to enhance their ETF operations but lacking large-scale broad-based ETFs are particularly motivated to secure new index licenses, looking to navigate the market with a tactical advantage.

Fund managers are actively developing ETFs related to the Sci-Tech Board, responding to the rapid evolution of the market landscapeOver the past few years, numerous indices that focus on the Sci-Tech Board have been launched, broadening the index architecture in this sector.

Marking its first anniversary in July 2020, the Shanghai Stock Exchange introduced the inaugural index based on the Sci-Tech Board—the Sci-Tech 50 IndexFast forward to July 2023, commemorating the board's four-year milestone, the exchange unveiled the Shanghai Sci-Tech 100 IndexThe upcoming release, anticipated for August 20, 2024, is set to present the Shanghai Sci-Tech 200 IndexWith the potential launch of the comprehensive index, this will represent a fourth significant addition to the Sci-Tech Board’s broad-based index offerings.

According to data from the China Securities Index Company, a total of 26 indices linked to the Sci-Tech Board had been released by the end of 2024, laying the groundwork for a comprehensive index system that encompasses various types reflecting scale, theme, and strategy.

On December 31, 2024, the Shanghai Stock Exchange and China Securities Index Co., Ltd

announced the formal debut of the Shanghai National New Sci-Tech Board State-Owned Enterprises Index on January 2, 2025. This index will selectively choose securities from state-owned or state-participating enterprises listed on the Sci-Tech Board, aimed at reflecting the overall performance of these entities within this innovative framework.

In response to the national call for fostering investment in technology-driven industries, fund companies have rallied to position their products accordingly, with related Sci-Tech indices boasting a combined tracking scale exceeding 230 billion YuanAs of January 5, major players, such as the Huaxia Sci-Tech 50 ETF, are approaching 100 billion Yuan in scale, while the E Fond Sci-Tech Board 50 ETF has surpassed 50 billion Yuan, alongside other ETFs like the Jiashi Sci-Tech Chip ETF and ICBC Credit Suisse Sci-Tech ETF also exceeding 10 billion Yuan.

Moreover, fund management firms continue to strategically invest in index funds that are associated with the Sci-Tech Board