Ping An Insurance (Group) Co. is expanding its range of bond ETFs as it tries to catch up in the fast-growing exchange-traded-funds market, while facing stiffer competition from global giants like Vanguard Group.
The Chinese financial conglomerate, which only offered its first ETF in late 2017, is targeting China's less-developed market for bond ETFs as vehicles that track broad indexes become more competitive given the dominance of large funds that were launched by local managers as early as 2004. The firm will start to offer products tracking shorter-dated government bonds and is also considering cross-market funds, said Cheng Jun, the head of ETF investments at Ping An Fund Management, in an interview.
While low fees and support from its parent company has helped Ping An Fund Management become the largest local bond ETF issuer, its current standing — about 16 billion yuan ($2.3 billion) across nine funds — lags Ping An's ambitions and is a fraction of the almost $1 trillion Vanguard oversees in the U.S.
"We're certainly not happy with the number," Mr. Cheng said. "We need to do more and we're planning to."
Vanguard, which doesn't yet have a license to offer onshore fund products, earlier this month formed an investment advisory joint venture with Jack Ma's Ant Financial, paving the way to bring its low-cost funds to China and tap rising demand for passive investments. BlackRock, the world's largest ETF issuer, won a Chinese private fund license in 2017 and has been offering products to qualified institutions and high-net-worth individuals.
Ping An's funds unit is also raising an ETF tracking stocks specializing in artificial intelligence. It has submitted applications for five other products, including two tracking local government bonds and one tracking new-energy-vehicle companies.