Is Mirae Asset Hang Seng Tech ETF a Promising Proposition to Benefit from the Tech Boom?

Nov 23, 2021

Listen to Is Mirae Asset Hang Seng Tech ETF a Promising Proposition to Benefit from the Tech Boom?

00:00 00:00


The Tech companies across the globe are expected to invest more in upcoming technologies and innovation like IOT, AI, etc. For investors, Soft Tech may provide them investment opportunities due to attractive valuations and they can generate decent returns from the growth potential of these tech-centric companies.

Chinese technology revolution is expected to be driven by rapid adoption of new technologies. China is now ranked 2nd in terms of facilitating number of unicorn companies across the globe with major focus on consumer driven technology companies. Tech giants like Alibaba, Baidu and JD.com have chosen to pursue additional listings on Hong Kong stock exchange to capitalize on its growing investor base.

Indian investors can benefit from the investment opportunity in the growing digital economy of China. Investors seeking to benefit from the emerging opportunities in the IT sector in the Chinese market may consider investing passively in securities under the index that comprises of high quality Tech-centric companies listed on the Hong Kong stock exchange.

Mirae Asset Mutual Fund has launched Mirae Asset Hang Seng Tech ETF, which is an open-ended scheme replicating/tracking Hang Seng TECH Total Return Index.

On the launch of this Fund Mr Swarup Mohanty Director & CEO of Mirae Asset Investment Managers (India) said, "This is the Asian century with China being one of the dominant economies , with a focus on achieving major breakthroughs in core technologies such as AI, semiconductors, cloud computing, and other key areas for its future growth. The recent correction in Hang Seng TECH Index may provide Indian investors an attractive opportunity to diversify and get exposure in the growing digital economy of China."

Table 1: Details of Mirae Asset Hang Seng Tech ETF

Type An open-ended scheme replicating/tracking Hang Seng TECH Total Return Index Category Exchange Traded Fund
Investment Objective The investment objective of the scheme is to generate returns, before expenses, that are commensurate with the performance of the Hang Seng TECH Total Return Index, subject to tracking error and forex movement. The Scheme does not guarantee or assure any returns
Min. Investment Rs 5,000/- and in multiples of Re 1 thereafter. Face Value Rs 10/- per unit
Entry Load Not Applicable Exit Load Nil
Fund Manager Mr Sidhharth Srivastava Benchmark Index Hang Seng TECH TRI
Issue Opens: November 17, 2021 Issue Closes: November 29, 2021
(Source: Scheme Information Document)
 

The Investment Strategy for Mirae Asset Hang Seng Tech ETF will be as follows:

Mirae Asset Hang Seng Tech ETF will be managed passively with investment in a basket of stocks in a proportion that matches the weights of these stocks in the Hang Seng Tech Index.

The investment strategy of the scheme will be to invest in a basket of securities forming a part of Hang Seng TECH Index in similar weight proportion. The investment strategy would revolve around reducing the tracking error to the least possible through regular rebalancing of the portfolio, considering the change in weights of stocks in the Index as well as the incremental collections/redemptions in the scheme.

Being an exchange traded fund, the scheme will only invest in the securities comprising the underlying index. A part of the fund's portfolio may be invested in debt and money market instruments, to meet the liquidity requirements.

About the benchmark

Hang Seng TECH Index represents the 30 largest technology companies listed in Hong Kong that have high business exposure to technology themes and pass the index's screening criteria. The aim of the index is to track performance of the 30 largest technology companies listed on the Hong Kong Stock Exchange, deriving revenue from the Greater China Region, which have high business exposure to the Technology Themes.

The Underlying Index is compiled and managed by Hang Seng Indexes Company Limited ("HSIL"), a wholly-owned subsidiary of Hang Seng Bank Limited. The Underlying Index adopts a free float-adjusted market capitalization weighted methodology, with 8% cap on individual constituent weightages applied on the date of rebalancing.

Here is the list of constituents under the index by their weightage as on September 30, 2021:

List
(Source: Scheme Information Document)

Under normal circumstances, the asset allocation of the scheme will be as under:

Table 2: Asset Allocation for Mirae Asset Hang Seng Tech ETF

Instruments Indicative Allocation (% of net assets) Risk Profile
Minimum Maximum High/Medium/Low
Securities included in the Hang Seng TECH Index 95 100 High
Money market instruments / debt securities, Instruments and/or units of schemes of domestic Mutual Funds. 0 5 Low to Medium
(Source: Scheme Information Document)
 

Who will manage Mirae Asset Hang Seng Tech ETF?

Mr Siddharth Srivastava will be the dedicated fund manager for this scheme.

Mr Siddharth Srivastava is Head - ETF Products at Mirae Asset Global Investments. Mr Srivastava holds a MBA (Tech) and BTech, and has more than 10 years of experience in the field of financial services and stock markets. Prior to this, he was associated with NSE Indices Limited as Senior Manager and Morgan Stanley Capital International as Senior Associate.

The other schemes that Mr Srivastava manages are Mirae Asset NYSE Fang+ ETF and Mirae Asset S&P 500 Top 50 ETF.

Fund Outlook - Mirae Asset Hang Seng Tech ETF

Mirae Asset Hang Seng Tech ETF aims to predominantly invest in securities consisting the Hang Seng Tech Index and provide returns that closely correspond to the total returns of the underlying index by minimising the tracking errors.

The scheme will follow and invest in securities of the underlying index, which represents the 30 largest technology companies listed in Hong Kong, which have high business exposure in selected technology themes like internet (including mobile), fintech, cloud, e-commerce, or digital activities. The technology companies selected for the portfolio are the Greater China Companies that are listed on the main board of the SEHK.

The scheme offers investors with diversification and exposure to 30 largest Tech centric Chinese companies listed on the Hong Kong Stock Exchange. Investment in an Index, which is expected evolve with the changing dynamics in Tech space and new listings in the Hong Kong markets may benefit investors seeking to earn optimal returns.

However, this scheme is a sector-oriented ETF that will aim to invest mainly in tech centric companies from the Chinese IT sector, which creates a concentration risk. If the sector goes out of favour, your portfolio performance will be negatively affected, which makes the scheme a risky investment proposition.

The scheme is suitable only for aggressive investors with high-risk tolerance, who have a better understanding of the IT sector and are seeking to benefit from the opportunities in the Chinese markets. More importantly, they should have an investment horizon of at least 5-7 years.

PS: If you wish to select worthy mutual fund schemes, I recommend you that you subscribe to PersonalFN's unbiased premium research service, Fund Select.

As a bonus, you get access to PersonalFN's popular debt mutual fund service, DebtSelect.

PersonalFN recommendations go through our stringent process that assesses both quantitative and qualitative parameters, providing you with Buy, Hold, and Sell recommendations on equity and debt mutual fund schemes. Read here for more details...

If you are serious about investing in rewarding mutual fund schemes then, Subscribe now!

 

Warm Regards,
Mitali Dhoke
Jr. Research Analyst

 

Join Now: PersonalFN is now on Telegram. Join FREE Today to get 'Daily Wealth Letter' and Exclusive Updates on Mutual Funds




Add Comments