My Thoughts on IShare Hang Seng Tech ETF (XIRR)

 

Please click and read this disclaimer if you wish to continue with the contents below.

Since the launch of Hang Seng Tech Index, a flurry of ETF companies have launched their own tracker for that index. Likely due to the incoming Chinese tech giants dual listing on HK in the coming months. Out of the 4 similar HS tech ETFs listed on HKSE, IShares Hang Seng Tech Tech(HK:3067) has the lowest expense ratio of 0.25%. 

China AMC Hang Seng Tech ETF(HK:3088) has an expense ratio of 0.6%. It has a higher expense ratio than iShares Hang Seng ETF but it is of Chinese capital and may not be affected if US starts to sanction American funds from buying Chinese tech companies. 

I am personally vested in IShares Hang Seng Tech ETF(HK:3067) with a 3.33% weightage in my portfolio. It has the lowest expense ratio and its trading currency is the same as its base currency(unlike the Lion OCBC ETF) 

The Managers uses representative sampling strategy. “Representative sampling” is an indexing strategy that involves investing, directly or indirectly, in a representative sample of the Securities included in the relevant Underlying Index that collectively has an investment profile that reflects the profile of the relevant Underlying Index. An Index Fund adopting a representative sampling investment strategy may or may not hold all of the Securities that are included in the relevant Underlying Index, and may hold Securities which are not included in the Underlying Index, provided that the sample closely reflects the overall characteristics of the Underlying Index. 

It may overweight holdings of Securities relative to the respective weightings of the constituents in the Underlying Index, provided that the maximum extra weighting in any Security relative to the respective constituent in the Underlying Index will not exceed 3%. The Manager shall report to the SFC on a timely basis if there is any non-compliance with this limit during such period by the iShares Core Hang Seng Index ETF. The annual and semi-annual reports of the iShares Core Hang Seng Index ETF shall also disclose whether or not such limit has been complied with during such period. So even though the expense ratio is low, due to representative sampling, there might be more tracking error for this ETF.

This ETF has a distribution policy. Semi-annually, at the Manager’s discretion (usually in May/June and November/December each year) (if any). Distributions may be made out of capital or effectively out of capital as well as income at the Manager’s discretion. All Units will receive distributions in the Base Currency (HKD) only. As it is domiciled in Hong Kong, there is no tax on dividend.

Why is there a need for a Hang Seng Tech Index in my portfolio? Firstly, the Hang Seng Tech Index is a thematic index with diversified coverage in technology companies rather than merely a single individual constituent stock. Alibaba, Tencent, Meituan Dianping and Xiaomi Group, have a combined weight of more than 30%. Besides, the index also includes a comprehensive suite of other technology giants to fully capture the potential return from the leading new economy and technology stocks. I am bullish on the Chinese tech sector and despite their consistently high CAGR, their valuation is still drastically below their American counterpart. I recently watched a discussion on youtube among intellectuals, most of them agree that Shenzhen has already surpassed Silicon Valley in terms of technology prowess.

Secondly, unlike traditional technology companies, the Tech Index covers companies from wider-ranging sectors such as internet (including mobile), fintech, cloud, e-commerce, or digital activities, enabling investors to easily seize investment appreciation opportunities by riding on trend of technology development. Moreover, the 30 constituent stocks in the Hang Seng Tech Index combined represent approximately 39% of the total market capitalization and 31% of the turnover of the Hong Kong Stock Exchange, reflecting the market's strong demand for new economy stocks.

Lastly, many well-known technology giants such as Alibaba, Meituan Dianping, Netease, and JD.com have returned to Hong Kong for listing. The market is expecting the return of more foreign-listed Chinese concept stocks or "unicorns” for simultaneous A and H share listing. The Hang Seng Tech Index has a fast entry mechanism to allow sizable newly listed technology companies to be included in the index in a more timely manner without the need to wait until the regular quarterly review(14 days). Netease and JD.com have joined the index through this mechanism. Under the mechanism, the Tech Index will be able to quickly capture potential investment appreciation opportunities brought about by the return and listing of Chinese concept stocks.

Full disclosure, I have vested interest in IShare Hang Seng Tech ETF and it is currently up 36%

Snap shot of my portfolio performance as of today: Total profit for 2021: S$68,094.16 due to 11% price increase for XD and 8% price increase for Chanjet on Friday.



2 comments :

  1. Financial Services business and personal loans no collateral require I offer advantageous financial loans: bullsindiaww@gmail.com

    ReplyDelete
  2. We Offer all types of Finance Business Personal Cash
    Quick Cash Advance. Fast Credit Check. Cash Today. Fast Cash Online
    low interest rate as low as 3%
    Financial Cash Available Here
    Business Personal Cash
    Solve Your Financial Problems
    I'll advise All Cash seeker should contact us
    We Are Here To Show You A Better Way To Financial Freedom !!!

    Contact Us At :email: ronnieinfo247@gmail.com
    Whats-App +919311856893
    Dr. Mark Thomas

    ReplyDelete