Premia Partners has launched two Asia-focused thematic ETFs on the Hong Kong stock exchange (HKEX), providing exposure to innovative technology and ASEAN titans.
Rebecca Chua, managing partner of Premia Partners.
Rebecca Chua, managing partner of Premia Partners, said “Investors are keen to invest in the secular trends that drive emerging growth economies, as well as the technology-enabled growth sectors in Asia, where demographics and population size often power growth of innovative technology applications to a different level by order of magnitude.”
Innovative tech
The Premia Asia Innovative Technology ETF tracks the Premia FactSet Asia Innovative Technology Index, created in collaboration with financial data firm FactSet.
The index is composed of firms engaged in emerging and disruptive solutions across technology-enabled sectors of digital transformation, healthcare & life sciences, and robotics & automation.
It selects firms from an eligible universe of Asia-listed stocks that have over $1 billion market capitalization and derive more than 20% of their revenue from at least one of 132 FactSet RBICS (Revere Business & Industry Classification System) industries that relate to the above sectors.
To sharpen the index’s focus on growth stocks, securities with a three year average annual R&D expense-to-revenue ratio less than 5% are excluded as well as those companies with a one-year revenue growth forecast below 10%.
The largest 50 securities are selected for index inclusion and assigned equal weights.
The fund has been listed with two share classes, one denominated in US dollars (Ticker: 9181 HK) and the other in Hong Kong dollars (Ticker: 3181 HK).
Emerging titans
The second of Premia’s new ETFs is the Premia Dow Jones Emerging ASEAN Titans 100 ETF. The fund tracks the Dow Jones Emerging ASEAN Titans 100 Index, which captures the performance of 100 leading companies from the ASEAN (Association of Southeast Asian Nations) countries of Indonesia, Malaysia, Philippines, Thailand and Vietnam. Singapore has notably been excluded and Vietnam included in order to target less advanced ASEAN markets with the potential for faster long-term growth.
Index selection is based on a composite ranking of market cap, revenue, and net income. According to Michael Orzano, Senior Director at S&P Dow Jones Indices, this process “is designed to give preference to the most well-established companies in the region that have a track record of generating sizable revenues and positive earnings while potentially tilting away from more speculative companies. It also may lend greater stability to the index composition, given the inherent volatility in company market values.”
The maximum weight of a single company is limited to 8%, while a single country weight cannot exceed 25% at rebalance.
The fund has also been listed with US dollar (Ticker: 9810 HK) and Hong Kong dollar (Ticker: 2810 HK) share classes.
The ETFs are physically replicated and come with expense ratios of 0.50%.
Premia Partners is relatively new to the ETF space, having launched its first ETFs – two multi-factor China A-share funds – in October 2017, namely the Premia CSI Caixin China Bedrock Economy ETF (2803 HK) and the Premia CSI Caixin China New Economy ETF (3173 HK).