The Tracker Fund of Hong Kong (SEHK: 2800) - Quick info
What is The Tracker Fund of Hong Kong exactly? Here I will give you some quick tidbits of info about it and what I find to be the most important/interesting facts. For the most part I have found and taken exact quotes from the company's website or product literature but I have also given a few of my own opinions as well. I am in way no giving advice to you or anyone else on whether to invest in the Fund as that needs to be your own personal decision backed by sound research and advice.
What is it?
"The Tracker Fund of Hong Kong ("TraHK") is an exchange-traded fund designed to provide investment results that closely correspond to the performance of the Hang Seng Index ("Index") "
What is the Fund Objective?
"TraHK's investment objective is to provide investment results that closely correspond to the performance of the Hang Seng Index. The Manager seeks to achieve TraHK's investment objective by investing all, or substantially all, of TraHK's assets in shares in the constituent companies of the Index ("Index Shares") in substantially the same weightings as they appear in the Index"
How does it work?
"The Hang Seng Index is composed of a representative sample of the shares of constituent companies listed on SEHK which generally have high market value and liquidity. It is designed such that it reproduces the performance of a hypothetical portfolio made up of the shares of the constituent companies with an interest in each constituent company which is always proportionate to such constituent company's market capitalisation adjusted to take into account the freefloat of the relevant shares."
How has the Fund performed in the past?
Below are some of the key facts about the Fund that I've taken from their product literature.
(As of Nov 30, 2019)
Stock Code: 2800
Underlying Index: Hang Seng Index
Trading Lot Size: 500 Units
Dividend policy: Semi-annually (generally May and November each year)
Number of Holdings: 50
Sector Breakdown: 49.46% Financials
Total Net Assets: $82 Billion
Fund Inception: 1999
Annualized return since inception: 3.09%
Top Holding: AIA Group Ltd. - 10.13% weighting
What are some of the main risks?
In my opinion the extraordinarily lopsided makeup of the index means it is not a well balanced fund that diversifies itself across the entire local economy but rather is largely financial companies playing the key roles. One thing to note it that this is not actually the fault of the Fund but rather the fault of the underlying index as explained in the Prospectus below.
"Hang Seng Index Risk Factors
“Concentration of the Hang Seng Index in certain economic sectors and companies
As at 29 November 2019, the industry weightings for Financials and Properties and Construction accounted for approximately 49.42% and 10.92% of the Hang Seng Index respectively. As a result, variations in the performance of these sectors could have a larger effect on the price of Units than a similar variation in the performance of other sectors comprised in the Hang Seng Index. Declines in the share price of companies in the Hang Seng Index may result in declines in the price of Units.”
* This post has been in no way supported or sponsored by the Fund and I have only taken snippets from their website to help people find the key information quicker than having to go through the Prospectus and other material. HOWEVER, never take something you read here as fact without checking and confirming with yourself from the original source material. I have provided the correct links below so you can double check everything I have said here. Please do not trust any person, including myself, without doing your own due diligence.
Fact Sheet: Tracker Fund of Hong Kong, Nov2019
Prospectus and Key Product Facts