Are individual investors taking on the challenge? In October, they became the main drivers of net ETF subscriptions.

Cailian Press, October 25 (Reporter Wang Chen) — In October, influenced by both policy and capital flows, the A-share market exhibited range-bound volatility. Throughout the month, major indices fluctuated around key levels, with occasional shifts in market sentiment but persistent prominence of structural opportunities.

The ETF market serves as a critical window for observing capital flows. Data shows that individual investors, with robust net subscription strength, became the dominant force in the market, contrasting sharply with the volatile portfolio adjustments made by institutional investors. The allocation strategies of different types of investors during market fluctuations showed significant differentiation.

Data on subscriptions and redemptions since October indicates that ETFs primarily held by individuals maintained strong subscription momentum overall. Although there were small net redemptions on the 16th, 21st, and 23rd, the cumulative net subscription still reached RMB 11.899 billion. Notably, single-day net subscriptions on the 10th and 13th amounted to RMB 3.564 billion and RMB 3.336 billion, respectively, demonstrating individual investors' firm confidence in the A-share market.

In contrast, ETFs primarily held by institutions displayed characteristics of initial purchases followed by redemptions, with significant increases in redemption intensity in the latter half of the month. On the 22nd, there was a single-day net redemption of nearly RMB 7 billion. As of the 23rd, the cumulative net subscription stood at only RMB 4.985 billion, less than half the scale of individual investors. Overall, during market volatility, individual funds did not experience large-scale withdrawals compared to institutional funds.

In terms of allocation preferences, individual investors focused on securities, consumption, and technology sectors. The securities ETF led with a net subscription of RMB 4.635 billion, followed closely by food and beverage, technology innovation semiconductors, and battery ETFs. Institutions, however, prioritized defensive and high-dividend products, with the banking ETF leading at RMB 6.26 billion in net subscriptions. Dividend low-volatility and resource-based ETFs were heavily allocated, while China Securities 500-related ETFs faced substantial redemptions. The divergence in strategies between the two investor groups was evident.

Individual ETF Net Subscription Scale Takes the Lead

From the daily and cumulative net subscription/redemption data between October 9 and 23, it is clear that ETFs predominantly held by individuals maintained strong subscription momentum throughout the month. On October 9, these ETFs recorded a single-day net subscription of RMB 2.884 billion. Subsequently, on October 10 and 13, single-day net subscriptions climbed to RMB 3.5643 billion and RMB 3.336 billion, respectively, pushing the cumulative net subscription past the RMB 9.7 billion mark by October 13.

Although ETFs predominantly held by individuals experienced minor net redemptions on October 16, 21, and 23 (-RMB 173 million, -RMB 1.263 billion, and -RMB 453 million, respectively), overall subscription strength far outweighed redemptions. As of October 23, the cumulative net subscription for October reached RMB 11.89902 billion, reflecting individual investors’ confidence in the market.

By comparison, ETFs predominantly held by institutions exhibited characteristics of volatile adjustments. From October 9 to 15, these ETFs were mostly in a state of net subscription, with a single-day net subscription reaching as high as RMB 7.963 billion on October 15, pushing the cumulative net subscription above RMB 13 billion on that day.

However, entering the middle to late October, institutions began to increase redemptions significantly. On October 16, 21, 22, and 23, net redemptions reached RMB 3.38 billion, RMB 3.803 billion, RMB 6.784 billion, and RMB 2.063 billion, respectively. Particularly on October 22, the single-day net redemption scale approached RMB 7 billion, directly causing the cumulative net subscriptions of institution-led ETFs in October to drop sharply. As of October 23, this figure stood at only RMB 4.985 billion, less than half of the cumulative net subscription size of individual-led ETFs.

Notably, during market adjustments, individuals and institutions have shown divergences. Against the backdrop of the SSE Composite Index consolidating narrowly around 3,850 points, retail funds did not experience large-scale withdrawals compared to institutional funds.

The strategic research perspective of Guojin Securities also corroborated this conclusion: During the week from October 13 to October 17, ETFs predominantly held by individuals saw net inflows. By sector, ETFs dominated by individual investors related to finance, real estate, new energy, and technology sectors were net subscribed. Additionally, during that week, ETFs primarily held by institutions were net redeemed, with broad-based ETFs accounting for the majority.

Retail investors focus on securities and consumer goods, with some tech sectors gaining favor.

Among ETFs predominantly held by individuals, based on the top 20 products ranked by cumulative net subscriptions in October, the Securities ETF topped the list with a cumulative net subscription amount of RMB 4.635 billion, becoming the most favored ETF product among retail investors. This figure far exceeded that of the second-ranked product, reflecting strong expectations among individual investors for future earnings growth in the brokerage sector.

The Food and Beverage ETF ranked second, with cumulative net subscriptions reaching RMB 1.811 billion. The food and beverage industry, as a traditional 'defensive + growth' sector, features stable performance and abundant cash flow. In an environment of increased market volatility, it often becomes an important choice for capital seeking safe havens and long-term allocation.

Within the technology sector, the STAR Technology Semiconductor ETF and Battery ETF ranked third and fourth, with cumulative net subscriptions of RMB 1.348 billion and RMB 1.289 billion, respectively, demonstrating significant attention from retail investors toward the semiconductor and new energy battery industries. Currently, the semiconductor industry benefits from accelerated domestic substitution and a recovery in global chip demand, with continuous technological breakthroughs achieved by domestic semiconductor companies in design, manufacturing, packaging, and testing. Meanwhile, the new energy battery industry is supported by the ongoing increase in global new energy vehicle penetration rates and the rapid development of the energy storage sector, maintaining high market demand growth. The long-term growth rationale of these two sectors has become an important basis for individual investors’ asset allocations.

Additionally, products such as the Rare Earth ETF (RMB 602 million), STAR 200 ETF Fund (RMB 564 million), and AI Technology ETF (RMB 357 million) also entered the top ten for cumulative net subscriptions, covering niche areas such as rare metals, STAR Market broad-based indices, and artificial intelligence. This highlights the diversified allocation strategy adopted by retail investors in technology and advanced manufacturing sectors.

In contrast to the heated subscription rankings, some products within ETFs predominantly held by individuals experienced net redemptions in October. The largest redemptions occurred in the Dividend SOE ETF, with cumulative net redemptions reaching RMB 1.111 billion, making it the product with the highest net redemptions among individually held ETFs in October.

The Tourism ETF ranked second with cumulative net redemptions of RMB 281.49 million. Furthermore, products such as the 800 Cash Flow ETF (-RMB 214 million), CSI 300 Growth ETF (-RMB 158 million), and AI Artificial Intelligence ETF (-RMB 151 million) also saw varying degrees of net redemptions.

Banks and dividend low-volatility strategies become key institutional allocations, while CSOP 500-related ETFs experience significant redemptions.

ETFs primarily held by institutions exhibited a pronounced "defensive + high-dividend" characteristic in their subscription and redemption choices during October. Among the top 20 ETFs ranked by cumulative net subscriptions, the banking ETF topped the list with a cumulative net subscription of RMB 6.26 billion, becoming a core allocation for institutions. In an environment of heightened market uncertainty, banks have emerged as a critical choice for institutional funds to mitigate risk.

The Dividend Low Volatility ETF ranked second with a cumulative net subscription of RMB 3.391 billion. The dividend low-volatility strategy focuses on high-dividend-yield, low-volatility listed companies, effectively reducing portfolio volatility during market fluctuations. Additionally, resource-based ETFs such as the Nonferrous Metals ETF (RMB 2.902 billion), Harvest Rare Earth ETF (RMB 2.807 billion), and Gold Stock ETF (RMB 1.829 billion) also made it into the top five in terms of cumulative net institutional subscriptions.

Among ETFs primarily held by institutions that experienced net redemptions, the Fullgoal CSI 500 ETF led with a cumulative net redemption of -RMB 4.851 billion, making it the product with the largest institutional redemptions. Other CSOP 500-related ETFs, including the Huatai-PineBridge A500 ETF (-RMB 3.397 billion), the Southern A500 ETF (-RMB 3.061 billion), and the CSOP 500 ETF (-RMB 2.505 billion), were also among the top five in terms of net redemptions, with total redemptions exceeding RMB 13 billion.

In addition, products such as the Communications ETF (-RMB 1.986 billion), the A500 ETF Fund (-RMB 1.490 billion), and the CSI 300 ETF (-RMB 1.254 billion) also saw significant net redemptions, reflecting proactive portfolio adjustments by institutions across different market styles and industry sectors, with redemptions mainly focused on broad-based ETFs.