China's First 18 Active ETFs Filed as Approval Nears Before Holiday

In mid-July 2026, the first batch of 18 active exchange-traded funds was filed. Two months on, the approval process is advancing, and the pilot fund companies are carrying out follow-up preparations in an orderly manner as required by regulators. During the pilot, regulators have tested managers' investment research, systems, operations and risk control capabilities through business guidelines, material reviews and special acceptance checks, focusing on whether fund companies can support a complete, stable and long-term active ETF business system.

Active ETFs combine active management with the ETF trading mechanism, imposing new business requirements on investment operations, information disclosure, subscription and redemption, market making and risk control. Morgan Fund has completed the building of active ETF investment management capabilities and set up a working group including core personnel for fund managers, market maker management, risk management and ETF platform management. Other fund companies have established cross-department coordination mechanisms, forming ETF operation, risk management and emergency response teams to connect investment research, trading, operations, risk control and information technology, and have implemented double review and primary-backup staffing requirements.

Several companies have completed adaptation and multiple rounds of testing of their business systems for active ETF scenarios, establishing multiple verification mechanisms and backup systems for PCF generation, review and publication, as well as IOPV calculation and real-time risk indicator monitoring. Daily disclosure of a PCF list based on actual holdings is one feature distinguishing active ETFs from traditional active equity funds. As required, active ETFs are subject to a diversification constraint of no fewer than 30 holdings and no more than 60% in the top ten weights.

At the operational level, daily generation and review of PCF and IOPV allow little room for error. Several companies have set up dual-department, dual-position review mechanisms, generating and reviewing PCF through two people and two systems while conducting real-time IOPV review.

Some fund companies have established rebalancing constraints and turnover monitoring mechanisms, including limits on very short-term portfolio position replacement, turnover risk monitoring and short-term turnover control, and will regularly review trading activity. Others have set up mechanisms to control deviation from performance benchmarks, regularly monitoring portfolio industry concentration, benchmark correlation and benchmark style deviation indicators, and evaluating investment style stability in conjunction with the daily PCF list.

The product filed by Huatai-PineBridge Fund plans to adopt a value investment strategy, without fixing investment in a particular type of company. Stock selection follows three dimensions: valuation significantly below a reasonable level, stable and sustainable growth, and management oriented toward equity returns. This investment framework does not rely on macro judgment for industry rotation, and portfolio industry distribution forms naturally from individual stock selection.

Active ETFs place higher demands on market makers. Because the PCF list must be updated daily with actual holdings, IOPV review points are more numerous than for passive ETFs. A fund company in East China will assign dedicated staff to liaise with market makers, communicating with them when bid-ask spreads are too wide or liquidity is poor and requiring them to strengthen order book width and depth management, while investment, trading and risk control departments monitor premium and discount indicators in real time. Morgan Fund cooperates with several leading market makers and manages potential risks such as IOPV and valuation deviation through system monitoring and dedicated liaison. Huatai-PineBridge Fund plans to bring in multiple market makers, agree on quotation obligations, establish market maker evaluation and backup mechanisms, define warning lines for the absolute value of premiums and discounts with tiered response measures, and prepare contingency plans for sustained abnormal moves in underlying assets and severe market volatility.

On distribution, 17 of the first batch of products use a securities-settlement model, with banks and brokerages participating. Morgan Fund, relying on cooperation with core brokerage main distribution channels, provides investor education for channels and end investors and expands institutional clients through online and offline activities. One fund company proposed advancing channel and institutional ecosystem building in three areas: strengthening coordination with brokerages in trading services, client coverage and investment advisory services; working with brokerages, banks and other channels to tap potential allocation demand from pension, wealth management, FOF and other long-term funds; and promoting long-term fund holding.

On investor education, Morgan Fund has continuously published active ETF educational content through official social media platforms, with cumulative exposure exceeding 5 million views. It has also released an Active ETF Investment Guide covering six sections: basic definitions, development drivers, operating logic, screening methods, investment strategies and risk prevention, which has been downloaded several thousand times across the internet since release. Huatai-PineBridge Fund has built diverse active ETF educational content and launched materials on risk points such as the IOPV calculation mechanism and on-exchange high premiums. Morgan Fund, together with Guotai Haitong Securities, Guosen Securities and other brokerage institutions, has conducted more than 300 frontline investment advisor training sessions, covering more than 70 cities and towns nationwide. Another fund company has held nearly 20 offline brokerage investor education events.