China's Securities Regulator Approves Actively Managed ETFs
In brief
- CSRC greenlit actively managed ETFs, previously unavailable in mainland China
- Actively managed ETFs free portfolio managers from index constraints to construct research-based holdings
- International asset managers like JPMorgan and State Street can now deploy active strategies in China
A Long-Awaited Format Shift
Actively managed ETFs break that leash entirely. Portfolio managers can construct holdings based on their own research, convictions, and market views without being anchored to any specific index. Until now, Chinese ETF providers were restricted to enhanced index ETFs, which allow a maximum deviation of only 20% from their benchmark indices. That structural constraint severely limited the types of strategies available to retail and institutional investors on mainland exchanges.
The approval wasn't a surprise. JPMorgan Asset Management CEO George Gatch projected in early 2026 that the CSRC would grant permission for actively managed ETFs within the year. State Street similarly flagged in its 2026 ETF outlook that policy support for fully actively managed ETFs was on the horizon. Both forecasts have materialized.
Global Asset Managers Gain Distribution
For international asset managers, firms like JPMorgan and State Street have deep active management capabilities that were essentially unusable in mainland China's ETF format. Now those capabilities have a distribution channel. The approval removes a regulatory barrier that kept some of the world's largest active managers out of China's ETF ecosystem.
The CSRC's broader push is unmistakable. The commission has approved as many as 17 ETFs in a single day, signaling appetite for rapid market development. Alongside product expansion, the regulator instituted significant fee reforms, with reductions reaching up to 70%. Lower fees make ETFs more competitive against traditional mutual funds and help attract retail investors who are price-sensitive.
The shift could reshape China's asset management landscape. Active management was previously confined to mutual funds and separate accounts, both formats that carried friction costs and limited accessibility. ETF wrappers, by contrast, offer intraday trading, tax efficiency, and transparency. Removing the index constraint means those benefits now apply to a much broader range of investment strategies.
