ASHS provides targeted exposure to 500 smaller Chinese companies trading on mainland exchanges (Shanghai and Shenzhen A-shares), capturing China's domestic growth stories beyond the mega-caps that dominate most China ETFs.
How It Works
The fund tracks the CSI 500 Index, which selects the 500 largest A-shares after excluding the top 300 by market cap. This creates a portfolio of mid-to-small cap Chinese companies weighted by free-float market cap, rebalanced semi-annually. The fund uses a feeder structure through a Cayman Islands subsidiary to access restricted A-shares markets.
Key Features
- Pure A-shares exposure capturing domestic Chinese companies most foreigners can't directly buy
- Avoids state-owned giants, focusing on entrepreneurial private sector growth companies
- Complements large-cap China ETFs by targeting the next tier of emerging champions
Risks
- A-shares can swing 10% daily with trading halts common — expect 40%+ annual volatility
- Chinese regulatory crackdowns can erase entire sectors overnight without warning
- Currency risk from unhedged RMB exposure plus potential capital controls limiting withdrawals
Who Should Own This
Best suited for investors with strong China conviction seeking exposure beyond Alibaba and Tencent, willing to stomach extreme volatility for access to China's domestic consumption story. Works as a 2-5% satellite position for those already overweight U.S. tech looking to diversify into emerging market small-caps.