Phillip Capital Management (Hong Kong) has introduced its first ETF in Hong Kong with the launch of a fund tracking the city’s most recently listed equities.
The ETF is the first in Hong Kong to target recently listed stocks in the city.
The Phillip HK Newly Listed Equities Index ETF (2835 HK) has been listed on the Stock Exchange of Hong Kong in Hong Kong dollars.
The fund comes with a management fee of 0.60% and estimated ongoing charges over a year of 1.50%.
According to Phillip Capital, the ETF offers investors exposure to up-and-coming initial public offerings (IPOs) with high growth potential as well as more established Mainland Chinese companies that may be pursuing a secondary listing in Hong Kong.
The firm notes the fund is expected to remain diversified across a broad number of sectors ranging from pharmaceuticals to communications.
Jeffrey Lee, Chief Investment Officer of Phillip Capital Management, said: “The Hong Kong market will continue to be a magnet for the listing of the next Tencent or Alibaba. Our ETF will offer exposure to the vibrant Hong Kong IPO market with myriad investment opportunities.”
Methodology
The fund is linked to the Solactive Hong Kong Newly Listed Equities Index which consists of stocks that have made their debut in Hong Kong within the last rolling three years. IPOs, listing switches, listings by introduction, and spinoffs all qualify for inclusion.
Eligible constituents must have market capitalizations above HK$1 billion (approx. $130 million) and average daily trading volumes in excess of HK$10m ($1.3m).
If less than 35 stocks are eligible for selection, the index will extend the time period cutoff beyond three years until this threshold is met. If more than 50 stocks are eligible for selection, the index will include only the 50 largest qualifying companies.
Constituents are weighted by float-adjusted market capitalization. The index is reconstituted and rebalanced on a quarterly basis, although regular monthly reviews are also utilized so that current IPOs may enter the index without significant delay.
As of 23 November, the ETF’s largest holdings included JD.com (10.7%), Alibaba (9.7%), NetEase (9.4%), Baidu (8.9%), Yum China (6.9%), NIO (5.3%), and Trip.com (5.1%).
Timo Pfeiffer, Chief Markets Officer at Solactive, said: “This IPO strategy offers investors the possibility of diversifying with newly listed companies in Hong Kong that are in the very beginning of their public journey with many opportunities to consider. We are delighted that Phillip Capital saw the potential in this space and chose Solactive to launch this ETF, and we look forward to jointly expanding our footprints together in the APAC region.”