Active Investment Giants Enter the ETF Race! How to Stand Out with Differentiation?

【Introduction】Eastern Red Asset Management reports ETF products. How do new entrants differentiate themselves?

Another established asset management firm known for active equity investments has officially entered the ETF market.

According to information on the China Securities Regulatory Commission website, on March 19, Eastern Red Asset Management filed a product called “Eastern Red CSI Eastern Red Dividend Low Volatility ETF,” which is currently under review. This is the company’s first ETF product since its founding, marking its formal entry into the increasingly competitive ETF market.

As the total ETF market continues to expand and industry competition intensifies, leading active management firms are entering the space, prompting renewed scrutiny of the ETF landscape and strategic differentiation.

Eastern Red Asset Management reports ETF product

Approval progress information from the CSRC shows that the dividend low-volatility ETF filed by Eastern Red Asset Management has received acceptance of materials. Although this is their first ETF product, the firm has long been deeply involved in index enhancement, and this extension into ETFs is seen by the market as a key step to improve passive investment tools and complete their product lineup.

“A move into ETFs isn’t a sudden ‘cross-over,’ but rather a natural extension based on their core capabilities,” said a fund industry insider in Shanghai. Their deep research in active equities and fixed income, especially in asset allocation and fundamental stock selection, provides a solid research foundation for ETF deployment. From index enhancement to pure ETF tools, their investment research capabilities can be downward compatible, empowering the underlying asset quality of ETFs through in-depth research.

Eastern Red Asset Management’s entry is not an isolated case. In recent years, a number of fund companies known for active equity investments have entered the ETF space, becoming a new industry trend.

In September 2025, Bank of Communications Schroder Fund restarted its ETF product line after 14 years, filing for the Bank of Communications Schroder CSI Smart Selection Shanghai-Shenzhen-Hong Kong Technology 50 ETF; Xingzheng Global Fund also filed its first ETF in 22 years—Xingzheng Global Shanghai-Shenzhen 300 Quality ETF.

How do new entrants differentiate themselves?

Currently, the domestic ETF market shows a clear concentration of leading players. For new entrants, the common question is: Is there still an opportunity?

Industry analysts believe that while the growth phase for broad-based ETFs has passed, the boundaries of the ETF market are rapidly expanding. From thematic funds to multi-asset strategies, investors’ increasingly diverse allocation needs mean the ETF market is far from saturated.

It is reported that Eastern Red Asset Management did not choose a broad-based index in the highly competitive market but instead targeted the “low dividend volatility” niche, precisely positioning itself with a Smart Beta strategy.

The low dividend volatility strategy has gained attention in recent years because it combines “high dividend yield” and “low volatility,” offering dual defensive attributes. During market turbulence, it often demonstrates good downside resistance, aligning with investors’ current focus on steady returns and long-term allocation.

A senior ETF research expert said that low dividend volatility is a well-established factor globally, but there is still room for deeper exploration and productization in the domestic market. By choosing this niche, Eastern Red Asset Management avoids direct price competition with top institutions on core broad-based indices and leverages its strengths in value investing to build differentiated products through factor screening.

The expert further pointed out that for firms like Eastern Red Asset Management, the strategic significance of entering ETFs is not just about increasing scale but also about smoothing overall business cycles. Active management is more affected by market sentiment and fund manager skills, while ETFs, as standardized products, provide a more stable scale foundation. Combining active and passive strategies helps enhance the company’s resilience and competitiveness across different market conditions.

From industry trends, ETF deployment is shifting from “involution” to deeper differentiation. Cui Yue, an analyst at Morningstar China Fund Research Center, said that product diversification is likely to further strengthen. As index products continue to grow, some institutions are gradually expanding into index investment and asset allocation services. ETFs are expected to cover more emerging areas and exhibit richer risk-return profiles.

(Source: China Fund News)