Cash Flow Assets Remain Resilient, ETF Shares Surge Within the Year

Securities Times Reporter Zhao Mengqiao

Recently, against the backdrop of complex and changing global geopolitical patterns, investors’ demand for certainty assets has surged, and cash flow assets remain strong.

Taking the CSI Cash Flow Full Yield Index as an example, statistics show that the index has increased by 10.51% since the beginning of the year. In terms of constituent stocks, the index includes shipping stocks that have recently performed exceptionally well, such as China National Offshore Oil Corporation and COSCO Shipping Holdings.

Looking at the longer term, the index’s performance this year is not accidental. Wind data shows that since the base date, the CSI Cash Flow Full Yield Index has gained a total of 848.59%. Even during last year’s “tech bull” market, this index still rose by nearly 20%.

Regarding ETFs, multiple products tracking the CSI All Share Free Cash Flow Index, CSI 800 Free Cash Flow Index, and CSI 300 Free Cash Flow Index have all increased by over 11% this year; additionally, overall capital flows are showing net inflows. The Huaxia CSI Free Cash Flow ETF’s shares increased by over 6.17 billion units this year, ranking first among all products; Huatai-Pbrr CSI All Share Free Cash Flow ETF and Southern CSI All Share Free Cash Flow ETF both saw their shares increase by over 1 billion units. Among 30 related products, 20 ETFs experienced net capital inflows this year.

It is worth noting that, unlike dividend indices which fluctuate in the secondary market, several free cash flow indices have continued to hit new highs.

Great Wall Fund states that dividend and cash flow strategies are fundamentally different: dividend strategies mainly focus on shareholder returns, with income primarily from dividends and some stock price appreciation, with static dividend yield as a core indicator; cash flow strategies focus on the stability of corporate profitability and the sustainability of cash quality, paying attention to a company’s future dividend-paying capacity, reflected in indicators that capture changes in EBIT (Earnings Before Interest and Taxes).

For example, the CSI Cash Flow Full Yield Index has established a dynamic adjustment mechanism that maintains the effectiveness of the free cash flow strategy through “self-iteration.” When a company’s cash flow deteriorates or when rising stock prices lead to overvaluation and weaken the index, individual stocks risk being removed; conversely, new targets with high-quality cash flow characteristics are likely to be included in a timely manner, continuously optimizing the sample and always anchoring to the most genuinely “cash-generating” high-quality companies in the A-share market.

Huatai-Pbrr Fund believes that the free cash flow strategy represented by the CSI Cash Flow Full Yield Index is currently experiencing a triple resonance of defensive attributes, profitability quality, and hard assets.

First, increased geopolitical disturbances are intensifying market volatility, and investors’ demand for certainty assets is rising. Free cash flow, as a true measure of corporate profitability in cash, can effectively filter out accounting profit distortions and select companies with stronger risk resistance. Second, in recent years, A-share listed companies have become more cautious in capital expenditure, shifting their focus from scale expansion to pursuing profit quality and cash flow stability.

Boshi Fund’s Chief Equity Strategist Chen Xianshun reminds that structural differentiation in the economy and expectations of interest rate cycle shifts have led to heightened HALO trading. While it may not dominate the market entirely, it can be considered a standard defensive core holding in institutional portfolios. “A-shares are highly compatible with this logic: high proportion of real assets, stable cash flow from state-owned enterprises, and policy support for hard technology bases align closely with HALO principles. Current deployment should focus on three points: prioritize leading companies with high barriers to entry, high dividends, and low capital expenditure; strictly control position sizes as a hedge; and monitor interest rates, policy pricing, and supply-demand patterns, using cash flow and dividends as core valuation anchors, while downplaying short-term thematic volatility,” Chen Xianshun analyzes.

(Chief Editor: Wang Zhiqiang HF013)

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