Frequent "roller-coaster" markets: How to resolve the dilemma faced by mini ETFs

| \| \| \| — \| \| 　　ChinaAMC ChiNext Composite ETF Chart 　　Bank of Communications Deep Value ETF Chart 　　Guo Chenkai Map \| | | — | — | — | — | — | — | — |

◎Reporter Zhao Mingchao

Recently, many ETFs have experienced extreme “roller coaster” swings, with sudden limit-ups and unexpected crashes, catching many investors off guard. Analysis shows that behind these abnormal market movements lacking fundamental support is liquidity issues caused by shrinking ETF sizes.

It has been found that there are nearly 1,500 ETFs currently, with about 140 having assets under 50 million yuan. Many more ETFs are in the process of being reported or issued. Industry insiders believe that the ETF industry has always been a “winner-takes-all” game; fund companies need to plan within their capacity, and creating competitive products is the key to success.

Frequent Fluctuations: Multiple ETFs Experience “Roller Coaster” Rides

On March 18, after being suspended for an hour in the morning, ChinaAMC ChiNext Composite ETF closed down 16.84%.

This sharp decline may have been foreshadowed the day before. On March 17, the ETF showed unusual activity near market close, with a 20.03% gain.

It was observed that near the close that day, a buy order of about 120,000 yuan significantly boosted the ETF’s price, deviating sharply from its net asset value. The ETF’s total trading volume for the day was 6.4 million yuan.

On the evening of March 17, ChinaAMC Fund announced that the trading price of the ChinaAMC ChiNext Composite ETF in the secondary market had experienced a large premium, with the trading price significantly diverging from the fund’s net asset value. Trading was suspended from market open on March 18 until 10:30 a.m. that day.

Similar scenarios have been happening frequently recently: on March 13 and March 16, Bank of Communications Deep Value ETF rose 4.23% and 3.25%, with trading volumes of 103,100 yuan and 7.33 million yuan respectively. The fund company issued two risk warning notices about premium risks. On March 17, the ETF plummeted 9.75%, and the high premium rate decreased accordingly.

ICBC National Certificate 2000 ETF faced a similar situation. On March 9, it surged 9.94%, with a trading volume of only 3.65 million yuan. Due to high premium rates, it was suspended for an hour on March 10, and closed down 7.78% that day.

Looking at recent volatile ETFs, they generally have small sizes, low trading activity, and liquidity shortages, with small amounts capable of causing large impacts on secondary market prices. Specifically, according to Choice data, as of March 17, the Bank of Communications Deep Value ETF had a size of only 730 million yuan, and ICBC National Certificate 2000 ETF was just 670 million yuan.

Intense Competition and Homogenization Challenges

Over the past year, the number of ETFs has grown rapidly. As of March 18, there are 1,457 ETFs, including 363 established in 2025 and 57 more this year.

While product offerings continue to increase, size disparity has become more prominent. Overall, the total ETF assets amount to 52.2 trillion yuan, but industry leaders dominate: 119 ETFs have assets over 100 billion yuan. Conversely, 138 ETFs have less than 50 million yuan, facing liquidation risks. Among these, 32 ETFs have less than 20 million yuan, with low trading activity and little investor interest.

The size disparity is even more evident within specific sectors. For example, the CSI A500 ETF, launched in September 2024 with the first 10 funds, has expanded to 32 funds. The largest has nearly 40 billion yuan in assets, while the smallest has just over 80 million yuan.

“ETF products are highly homogeneous, requiring continuous resource investment from fund companies,” said a researcher from a Shanghai-based fund firm. He noted that the industry values first-mover advantages; larger funds tend to be more liquid, while smaller ETFs gradually lose liquidity and attention. Some popular sectors may seem promising, but the final landscape remains uncertain, leading to fierce competition among top fund companies, with only two or three emerging as winners.

Currently, when a sector becomes popular, many fund companies rush to launch related ETFs. For example, in the metals sector, 22 ETFs have been established, with 7 launched this year. The largest metal ETF was launched in 2017. Similarly, oil and gas ETFs have seen many new products recently.

It’s important to note that ETF operational costs are high, including marketing, staff salaries, index licensing, and market maker fees. A single ETF needs assets of at least 10-20 billion yuan to cover basic costs. Industry insiders warn that ETFs consume significant resources, and blind competition is not advisable.

Rational Planning to Build Core Competitiveness

For the ETF sector, where the Matthew Effect is prominent, a herd mentality among fund companies often leads to marginalization of many products. Regulators have previously reminded fund companies to act within their capacity.

The China Securities Regulatory Commission’s previous “Institutional Supervision Report” emphasized supporting market-based development of ETF products. It also urged fund managers to assess market trends and investor needs carefully, avoid herd behavior, and prevent issues like poor fundraising or unstable operations caused by over-competition.

HuaAn Fund’s Deputy General Manager Xu Zhiyan told Shanghai Securities News that in the second half of the ETF industry, competition will shift from size to quality, with differentiation becoming the core advantage.

Regarding breaking the deadlock, Xu believes that product innovation should focus on addressing actual needs rather than simple index replication. This includes deepening main broad-based tracks, improving liquidity and trading efficiency, and proactively developing thematic products in emerging fields like new productivity, technological independence, and green transformation—areas that reflect industry insights. Additionally, service models should shift from “selling products” to “helping with allocation.” ETFs are just the starting point for asset allocation; managers should provide clear strategic logic, regular portfolio reviews, and investment advisory solutions to help investors avoid chasing gains and losses, promoting long-term holding.

Deng Hu, an analyst at Shenwan Hongyuan Securities, stated in a report that most broad-based ETFs in China now have management fees as low as 0.15% annually. Improving returns through detailed management will play a more significant role in future competition. For industry-specific ETFs, some products may initially seem niche, but when market conditions turn favorable, early-launched products tend to attract the most attention.