Exchanged-traded fund (ETF) shop WisdomTree is to add China A shares exposure to two funds, the WisdomTree Emerging Markets ex-State-Owned Enterprises ETF and the WisdomTree China ex-State-Owned Enterprises ETF, effective August 11.
The A share exposure will be capped at 25% for the WisdomTree China ex-State-Owned Enterprises index and 5% for the WisdomTree Emerging Markets ex-State-Owned Enterprises index, the funds' respective indices.
The two indices will add the 50 largest companies by float-adjusted market capitalization that meet the their requirements for inclusion.
The addition of China A shares follows the firm’s reduction of expense ratios for both funds to 0.32% in June.
Jeremy Schwartz, WisdomTree director of research, said the move would give investors a more diverse exposure to China.
The move to add A shares, as well as the exclusion of state-owned companies, will allow the funds to benefit from China’s shift to a consumption and services-based economy, the firm has claimed, as it will mean they are tilted towards consumer-centric companies rather than overexposed to energy and state-run banking sectors.
The addition follows the decision of index provider MSCI to include China A shares in the MSCI Emerging Markets index and MSCI ACWI index in June.
New York-based WisdomTree has approximately $45.3 billion in assets under management globally.