USA
Actively managed ETF of ETFs
ETF newcomer Euclid has launched an actively managed ETF that aims to beat the S&P 500 with market timing. The Euclid Capital Growth ETF (EUCG) will buy shares and bond ETFs, changing between them based on risk, trends, and a computer model. When choosing ETFs, the fund looks at expense ratios and liquidity--in addition to investment strategy.
EUCG is currently betting on Big Tech, with large positions in the Schwab growth ETF and Fidelity’s tech ETF. It also appears to be making a small reopening trade, with the SPDR retail and regional banks ETFs.
The fund charges 0.82%. Its website is here.
Europe
HSBC lists Europe’s first China tech ETF
HSBC has launched Europe’s first Chinese tech ETF. The HSBC Hang Seng TECH UCITS ETF (HSTC) buys 30 tech companies listed in Hong Kong based on market capitalisation. The fund’s definition of tech is a bit broader and includes industrials and healthcare companies. To be included, companies must have high exposure to one of five themes; cloud, digital, e-commerce, fintech or internet/mobile.
The companies must also pass an innovation potential screening with the criteria that they operate a tech-enabled business model delivered via the internet, have strong R&D investment or a year-on-year revenue growth of at least 10%.
The fund charges 0.50%. The biggest holdings are the obvious candidates Alibaba, Tencent, Meituan, Xiaomi, Jd.com. But also less obvious ones like Sunny Opticals, Kingdee International and PA Good Doctor.
Analysis – unlucky timing and a complaint about HSBC’s website
You always need a bit of luck when it comes to ETF launches. If you launch and your fund starts outperforming straight away, then your assets will typically surge. By contrast, if you launch an ETF into a tanking market it can struggle to generate interest. For this reason we sometimes see ETF issuers delay their listings if launches are scheduled during corrections.
With the timing of this, HSBC has had little luck. In Trump’s final weeks in office he seems intent on lashing Chinese companies listed on US exchanges. The Chinese government, for its part, has launched an investigation into its internet giants for monopoly behaviour and the “disorderly expansion of capital”. Meanwhile, due to Jack Ma’s big mouth, Alibaba’s share price has fallen by one-third since December. All of which translates into headwinds for HSTC.
Aside from bad luck on timings—a quick complaint about HSBC’s website. ETF issuers put basic fund data such as expense ratio, AUM, how stocks are selected and weighted, how often the index is rebalanced, etc on their websites. Analysts and investors wanting to learn about their ETFs just go and quickly grab the data.
But HSBC – for whatever reason – hasn’t done this for its European ETFs. The website and fund factsheet (here)