China Files First 18 Active ETFs in Capital Markets Reform

China has taken a significant step forward in financial innovation with the formal filing of the first batch of 18 active Exchange-Traded Fund (ETF) products, submitted to the China Securities Regulatory Commission (CSRC) on July 16-17, 2026. The move, reported by Xinhua News, marks the rapid implementation of a policy announced just one month earlier and expands the investment toolkit available to Chinese investors.

Context: A Swift Policy-to-Market Transition

The filing follows CSRC Chairman Wu Qing’s announcement at the June 2026 Lujiazui Forum, where he expressed support for launching active ETFs on the Shanghai and Shenzhen stock exchanges. On the same day, both exchanges released their respective Active ETF Business Guidelines. According to CCTV, the transition from policy announcement to product filing took just one month, underscoring the regulatory push for financial innovation.

The 18 products are evenly split, with nine set to list on the Shanghai Stock Exchange (SSE) and nine on the Shenzhen Stock Exchange (SZSE). The fund managers include some of China’s largest asset management firms: E Fund, China Asset Management, China Universal, and J.P. Morgan Asset Management on the SSE side, and Southern Fund, Fullgoal, Dacheng, and ICBC Credit Suisse on the SZSE side.

What Are Active ETFs?

Unlike traditional passive ETFs that simply track an index, active ETFs are managed by fund managers who actively select securities with the goal of outperforming market benchmarks. As China News Service explains, active ETFs combine the trading flexibility and transparency of exchange-traded products with the active management approach of traditional mutual funds.

Li Zhan, Chief Economist at China Merchants Fund, noted that while management costs for active ETFs are higher than passive ETFs due to continuous research and active position adjustments, the on-exchange trading model means investors do not bear the sales service fees associated with traditional off-exchange active funds, making overall holding costs lower.

Product Strategies and Regulatory Guardrails

The 18 products adopt a range of investment strategies, primarily clustered around four themes: value-oriented, dividend-focused, balanced/steady, and growth/quality approaches. Most emphasize low turnover and high diversification, reflecting a cautious, steady-start philosophy.

Regulatory requirements are stringent. According to the Active ETF Business Guidelines, portfolios must hold at least 30 securities, with the top 10 holdings not exceeding 60% of net asset value. Stocks held must rank in the top 80% of daily trading volume on their respective exchanges. Fund managers are also required to maintain investment style stability and constrain turnover rates, avoiding short-term frequent trading and concentrated large-scale position adjustments.

Global Context and Market Significance

Active ETFs have become the fastest-growing segment of the global ETF market. As of end-March 2026, the global ETF market reached $19.9 trillion, with active ETFs accounting for $2.1 trillion, or 10.6% of the total. Over the past decade, active ETFs have grown at a compound annual growth rate of 44%, significantly outpacing the overall ETF market’s 19% growth.

Yao Ziwei, Chief of Financial Engineering and Funds at China Securities Construction, said the steady development of active ETFs is expected to promote market function upgrades and reshape the competitive landscape of the industry, bringing new growth space for the public fund industry.

Yu Mingming, Chief Financial Engineering Analyst at Dongwu Securities, emphasized that unlike traditional passive ETFs, the competitive advantage of active ETFs does not primarily come from product quantity, but rather depends more on product positioning, strategy capability, and single-product volume capacity.

Analysis: A Cautious Yet Transformative Step

The introduction of active ETFs represents a significant milestone for China’s capital markets. The products bridge the gap between passive index-tracking ETFs and traditional actively managed mutual funds, offering investors a tool that combines transparency, cost efficiency, and active management—a combination previously unavailable in China’s on-exchange market.

Several factors suggest regulators are prioritizing stability and investor protection. The conservative product strategies—leaning toward value, dividend, and balanced approaches rather than aggressive growth—indicate a deliberate “steady start” philosophy. The strict position limits and turnover constraints further reinforce this cautious approach.

Wang Baohe, General Manager of Quantitative Investment at Fullgoal Fund, highlighted that active management ETFs can fully leverage the price discovery function of active management, reduce price volatility risks from concentrated ETF subscription and redemption trading, and enhance the endogenous stability of capital markets.

What to Watch For

The 18 products are currently in “Materials Received” status on the CSRC website, awaiting formal approval. Key questions remain: When will the CSRC formally approve these products? Will the initial conservative strategy approach expand to more diverse strategies over time? And how will investor demand respond given current market conditions?

Major brokerages and banks are already competing for custody and settlement mandates, with some setting multi-billion yuan sales targets, indicating strong institutional interest. The products are being launched during a period of significant market adjustment, which some fund managers view as favorable for building positions.

As China aligns with global trends where active ETFs have become the fastest-growing segment of the ETF market, this development signals a new chapter in the evolution of the country’s capital markets—one that prioritizes innovation, investor choice, and market sophistication.