HONG KONG — E Fund Management (HK) Co., Ltd (“E Fund HK”) has invited Yuanta Securities Investment Trust Co., Ltd (“Yuanta Funds”), one of Asia’s largest inverse ETF issuers(1), to be its technical advisor for developing the E Fund Yuanta Hang Seng Index Daily (-1x) Inverse Product (7302.HK), which was officially listed on the Stock Exchange of Hong Kong today. This is E Fund HK’s first inverse product, offering an alternative investment instrument for investors in Mainland China and Hong Kong.
Ms Huang Gaohui, CEO of E Fund HK, said, “As the sole international business platform of E Fund, E Fund HK has had an established presence in Hong Kong for many years, providing bi-lateral and cross-border asset management services in equities, fixed income and alternative investments for global investors. A number of ETF products have been launched in Hong Kong, Europe and the US. We believe the Hang Seng Index Inverse ETF product (7302.HK) jointly developed with Yuanta Funds will meet the needs of the market and our customers. Yuanta Funds is the largest issuer of inverse ETFs in Asia, while E Fund HK has been named the Best Fund House of the Year (China offshore)(2). The collaboration between the two firms has brought synergy in asset management capabilities, providing investors with professional services.” Ms Huang added, “E Fund HK will continue to expand its offerings in commodity-linked ETFs involving gold and oil as permitted by regulatory policies.”
Mr Julian Liu, President & CEO of Yuanta Funds remarked, “The development of leveraged/inverse (L&I) ETF markets in Hong Kong began last year and Yuanta Funds is honoured to have the opportunity to develop L&I products jointly with E Fund HK. We look forward to leverage our experience in L&I ETF products in Taiwan and invite industry players from Taiwan to act as participating dealers, thereby achieving differentiation in Hong Kong’s L&I ETF space. We are also considering further collaboration for developing more L&I products in the future.”
The E Fund Yuanta Hang Seng Index Daily (-1x) Inverse Product targets a return equivalent to the inverse (-1x) of the daily performance of the Hang Seng Index. Each board lot consists of 100 units priced at HKD 12.5 each. The product invests in Hang Seng Index futures contracts to establish a short position, which is then adjusted daily to achieve a daily inverse investment ratio against the Index consistent with the investment objective. In addition, no more than 90% of the product’s net asset value will be invested in bank deposits and Hong Kong dollar denominated cash management instruments such as Exchange Fund Bills and money market funds in Hong Kong. This would help balance the product’s futures margin requirements and may also generate additional return.
L&I products have seen rapid growth in Asian markets, currently accounting for 87%, 59% and 76% of the overall ETF markets in Japan, South Korea and Taiwan respectively(3). E Fund HK expects the expansion of L&I products related to the Hang Seng Index and Chinese indices in Hong Kong would benefit the product’s penetration in the market, boosting transaction volume and activity of L&I products.
E Fund HK has been closely monitoring the development of L&I products in Hong Kong. In January this year, the Securities and Futures Commission of Hong Kong had given green light for L&I ETFs, accepting the application of products tracking broad-based indices of the Hong Kong market. This would provide greater choices for investors with a more local appetite who seek to track a familiar market index, and can also pique their interest in this space. In the light of this, E Fund HK joined forces with Yuanta Funds to launch an inverse product tracking the Hang Seng Index, aiming to enhance the penetration of related products in the market and attract the interest of retail and institutional investors.
(1) Bloomberg, as of February 28, 2017
(2) Asian Investor Asset Management Awards 2016
(3) Bloomberg, as of December 31, 2016.