Multiple ETFs split their shares, highlighting the inclusive nature of public fund products.

Recently, the pan-AI market trend has been strong, and the net values of related funds have also risen accordingly. In this context, multiple products have chosen to split shares. On July 3, the Semiconductor ETF Guolian An (512480) split shares at a ratio of 1:2, the AI ETF Huaxia (515070), the Semiconductor Equipment ETF Huaxia (562590), the Science and Technology Innovation Semiconductor ETF Huaxia (588170), and the Communications ETF Guotai (515880) used that day as the record date to split the registered fund shares.

Data shows that, calculated based on the record date, in about one month since June, 18 ETFs have split shares, nearly the total of the first five months of this year. Industry insiders analyze that lowering the investment threshold, increasing on-exchange liquidity, and reducing fund market-making costs are the main considerations behind the share splits. After the share splits, the price per fund share drops from 2 yuan, 3 yuan, or 4 yuan to 1 yuan or below, lowering the purchase threshold and making it easier for more investors to participate, further highlighting the "inclusive finance" attribute of public funds.

Reported by our journalist Zhang Yun

Intensive Share Splits

Since June, the 18 ETFs that have successively split fund shares generally split at a ratio of 1:2 or 1:3. The highest split ratio is for the Semiconductor Equipment ETF (159327) CMB, reaching 1:5. In addition, some products split at a ratio of 1:2.5.

Most of the ETFs that implemented splits achieved relatively strong performance in June. Among them, products primarily investing in semiconductors (881121), AI, and communications sectors account for the majority.

For example, the high-ratio split Semiconductor Equipment ETF (159327) CMB saw its on-exchange and off-exchange prices both rise over 50% in June, setting a monthly increase record since the fund's establishment and listing.

The Semiconductor ETF Guolian An (512480), which split ex-rights on July 3, saw its on-exchange and off-exchange prices both rise over 30% in June. The Semiconductor Equipment ETF Huaxia (562590) and the Science and Technology Innovation Semiconductor ETF Huaxia (588170), which split at a ratio of 1:3 using July 3 as the record date, saw on-exchange and off-exchange increases of over 60% in June; the AI ETF Huaxia (515070) and the Communications ETF Guotai (515880), which split at 1:2, both increased over 10% during the same period.

The Semiconductor Equipment ETF GF (560780), which split ex-rights at 1:3 on June 26, saw on-exchange and off-exchange increases of over 60% in June. The Xinchuang ETF (159539) Guotai, which also split ex-rights on the same day, rose over 20% in June, with fund shares split at a ratio of 1:2.

The Science and Technology Innovation Chip ETF Guotai (589100) and the Science and Technology Innovation 100 ETF Guotai (588120), which split ex-rights on June 24, rose over 30% and 20% in June, respectively. The former split shares at a ratio of 1:2.5, while the latter split at 1:2. The Integrated Circuit ETF Guotai (159546) and the Industrial Mother Machine ETF Guotai (159667), which split at 1:3 on June 10, also performed well in June, with the former's on-exchange and off-exchange prices rising about 29% and the latter rising over 18%.

At the fund company level, Guotai Fund has been particularly active in splitting shares. Since June, among the ETFs that have implemented share splits, more than half are managed by Guotai Fund. In addition to the products listed above, these also include relatively flat performers in June such as the Nonferrous Metals ETF Guotai (159881), the ChiNext 50 ETF Guotai (159375), and the Power Grid Equipment ETF Guotai (561380).

Lowering the Investment Threshold

"After splitting shares, the price per fund share is lower, which helps lower the investment threshold." This is a common response from several fund professionals interviewed.

Taking the Semiconductor Equipment ETF (159327) CMB as an example, before the split, each fund share had a net asset value of 4.1435 yuan; after the split, the fund's net asset value per share was 0.8287 yuan. In terms of on-exchange trading price, the fund's closing price was once over 4 yuan before the split, and after the split, it dropped to below 1 yuan. This means that from the split date, the threshold for investors to participate in on-exchange trading dropped from over 400 yuan to about 80 yuan (calculated based on the opening price on the ex-rights date).

Another example is the already split ex-rights Semiconductor Equipment ETF GF (560780) and the Science and Technology Innovation Chip ETF Guotai (589100). For the former, the on-exchange trading price dropped from over 3.7 yuan to about 1.3 yuan before and after the split; for the latter, it dropped from about 2.7 yuan to around 1.1 yuan, significantly lowering the on-exchange trading threshold.

In contrast, in this round of the pan-AI trend, the stock prices of many leading targets have surged to nearly a thousand yuan, requiring nearly 100k yuan for an investor to buy one hand.

By comparison, after public funds further split shares, the entry amount as low as about 100 yuan will attract more small and medium investors interested in technology to participate in the pan-AI wave through public fund products. At the same time, this is an intuitive reflection of public funds practicing the concept of inclusive finance.

Coincidentally, shortly after the implementation of this share-splitting measure, multiple funds continued to receive net subscriptions, with their scale increasing significantly. Data shows that since the split ex-rights on June 26, from June 29 to July 1, the Semiconductor Equipment ETF (159327) CMB saw net subscriptions exceeding 400 million shares for three consecutive trading days, and the Semiconductor Equipment ETF GF (560780) saw net subscriptions exceeding 500 million shares. Both funds set records for single-day scale growth this year on the day after the ex-rights, with the former increasing over 800 million yuan in a single day and the latter over 1.5 billion yuan.

Increased Trading Activity

It is important to note that this round of share splits primarily lowered the on-exchange trading threshold, while the off-exchange subscription and redemption threshold did not decrease. Many ETFs announced an increase in the minimum subscription and redemption unit size after the share split.

For example, the Semiconductor ETF Guolian An (512480), after splitting at 1:2, adjusted the minimum subscription and redemption unit from 2 million shares to 4 million shares starting July 3; the Semiconductor Equipment ETF GF (560780), after splitting at 1:3, adjusted the minimum subscription and redemption unit from 1 million shares to 3 million shares starting June 26. After calculation, the subscription and redemption threshold amount did not change significantly.

What considerations do fund companies have for only lowering the on-exchange trading threshold? It is understood that, on one hand, individual investors typically trade ETFs through on-exchange channels, so lowering the on-exchange threshold can better facilitate the majority of investors; on the other hand, lowering the on-exchange threshold is expected to increase the number of investors, diversify the investor structure, and improve the liquidity of the fund's secondary market; additionally, after the on-exchange trading activity increases, the market-making cost for ETFs can also be reduced. Thus, splitting shares and lowering the on-exchange trading threshold can achieve a win-win situation in multiple aspects.

From the data, many ETFs that split shares did indeed see an increase in trading volume, especially those that happened to catch the strong trend in the semiconductor (881121) sector, with the growth trend in trading volume being particularly pronounced.

For example, the Semiconductor Equipment ETF (159327) CMB, the Semiconductor Equipment ETF GF (560780), and the Science and Technology Innovation Chip ETF Guotai (589100) all saw a significant increase in average daily trading volume after the share split ex-rights.

However, some industry insiders believe that everything has two sides. Although fund share splits help lower the investment threshold and increase on-exchange trading activity, one must also be aware that a large influx of short-term funds may interfere with fund operations, and the perception that fund shares have become "cheaper" may create illusions for investors.

(Editor: Xu Nannan)

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