State Street Global Advisor Asia Limited– Analysis of Tracker Fund
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Transcript of State Street Global Advisor Asia Limited– Analysis of Tracker Fund
State Street Global State Street Global Advisor Advisor Asia Limited– Asia Limited– Analysis of Tracker Analysis of Tracker FundFund
Content
• Introduction of State Street Global Advisor Asia LimitedIntroduction of State Street Global Advisor Asia Limited
• Background of Tracker FundBackground of Tracker Fund
• Trend of Tracker FundTrend of Tracker Fund
• Comparison on Tracker Fund & Hang Seng UK Index FundComparison on Tracker Fund & Hang Seng UK Index Fund
• Advantages of investing Tracker FundAdvantages of investing Tracker Fund
• The Prospect of Tracker FundThe Prospect of Tracker Fund
Investment Company
- State Street Global Advisor Asia Limited
(SSgA Asia)
- regional headquarter of SSgA
SSgA : investment management division of State Street Corporation
Background :
• State Street Global Advisor (SSga)
• Established in 1978
• US$1.5 trillion
State Street Global Advisor Asia (SSgA Asis)
• 11 investment centers:
• Paris, Singapore, Hong Kong
-established in HK in 1990
-full investment center in 1997
Solutions:
• Defensive/
• aggressive strategies
• active /enhance/ passive style
Achievements:
• The largest manager of :
Institutional assets worldwide
Passive international indexed securities
Endowment and foundation assets, etc
• The manager of the Tracker fund
• Straits Times Index (STI)
• ABF Pan Asia Bond Index Fund (PAIF)
Background of Tracker Background of Tracker FundFund
Tracker Fund
• Stays close to the Hang Seng Index
• Buying Tracker Fund = Invest on a basket of stock:
~diversification~low transaction cost
• Launched on 12th November,1999
• Second large IPO in Asia(issue size HK$ 33.3 billion)
• Supported by governmentGovernment chose State Street Bank and Trust Co.
Background of Tracker Fund
Similarities and differencesbetween Track Fund and Common stock
Similarities:• Receive cash dividends• Buy or sell tracker Fund in Hong Kong during trading day• Tell the investment performance at any time
Difference:• Distribution of Dividend• Nature
Trend of Tracker FundTrend of Tracker Fund
Trend of TraHK
Trend of TraHK (cont’d)
U-shaped
Listed in HK stock market in 1999
Highest value: $19.39
Lowest value: $8.5
A watershed in mid-2003
Listed in 1999
Under the influence of Asia Financial Crisis
Unstable in the speculation of stock market
Market value fluctuated between $14 - $18
September 2001 911
Attacked financial market all over the world
TraHK dropped to $9
X
March 2003 SARS
Very week of the economy
Value nearly $8
SARS
• A watershed in 2003
• TraHK climbed up to over $19 in 2006
Comparison on Comparison on Tracker Fund & Hang Seng UK Tracker Fund & Hang Seng UK
Index FundIndex Fund
Comparison between two index fund
Tracker Fund
Vs.
Hang Seng UK
Index Fund
State Street
Global Advisors
Vs.
Hang Seng
Bank Management
Objectives
Tracker Fund:
• performance of the Hang Seng Index.
Hang Seng UK Index
• performance of the FTSE 100 Index
(英國富時指數 )
Distribution Policy
Tracker Fund:
• Distribute all of TraHK's net income
• Made net of TraHK’s expenses.
Hang Seng Index Fund:
• Unless a Unit holder requests
• Each distribution will be reinvested in the subscription for further units.
Charges & Expenses
Management Fee Administration Fee
Tracker Fund
0.05% HK$ 15 billion
0.045% next HK$ 15 billion
0.03% for the next 15 billion
0.025% excess of HK$ 45billion
$80 per unit holder
Hang Seng Index Fund
Up to 1 % of Net Asset Value
Max. up to 1 %
Weightings of Four Sectors
Sector of constituent Stocks
Tracker Fund
Weighting (%)
Hang Seng UK Index
Weighting (%)
No. of stocks 34 102
Finance 36.81% 27.63%
Utilities 5.23% 4.74%
Properties 10.72% 1.52%
Commerce and Industry
45.79% 15.38%
Others ---- 50.27%
Dividends
Tracker Fund (HKdollars)
Hang Seng UK Index Fund (US)
Current price
per share
$16.53 $13.02 ($101.6 in HK dollars)
Return Rate 10.16% 6.08%
Dividends HKD1.77 Reinvested
Summary on comparisons
Hang Seng UK index Fund:
• More diversify of the portfolio
• Different sectors in FTSE 100 Index
Tracker Fund:
• Investment requirement
• Return rate higher
Advantages of Advantages of investing Tracker Fundinvesting Tracker Fund
(1) Diversification
- Adverse proportion between risk and diversification
- Tracker Fund
Investing in a portfolio of securities
1-34 shares Hang Seng Index Funds
Risk decreases
(2) Low initial investment and low transaction cost
- Comparison between the investment cost of buying Tracker Fund and 1-34 Hang Seng Index Funds
*The figures are calculated on 23rd November 2006
- Using low initial investment cost to buy a portfolio
Tracker Fund
(2800)
HSBC Holdings
(0005)
Share Price $19.4 per share HK$146.3 per share
Investment Cost $19.4 x 500
= $9700
$146.3 x 500
= $73150
(2) Low initial investment and low transaction cost (con’d)
- 0.1125% stamp duty- less than 0.25% the brokers’ commission- 0.011% the transaction cost on Hong Kong
Exchanges and Clearing Limited
Less than 0.1%
• (3) Convenience
- Investors can buy and sell their Tracker Fund through brokers during the trading hours of the stock exchange
- Not limited by the rule—only one dealing per day Transact without the numbers of transaction
• (4) Professional management
- State Street Corporation
sound expertise and solid investment experience - change the weighting of the predicted performance of 34
Hang Seng Index Funds
Focusing on the Hang Seng Index do not necessary to acquire enough securities on different industries
The Prospect of Tracker The Prospect of Tracker FundFund
Prospect of Tracker Fund
• Competitive advantagelow transaction cost, trustee fee, low risk
• Do the competitive advantage still there in the future?
• Others Fund (like Hang Seng Index fund)challenge Tracker Fund
• Comparing Tracker Fund with Hang Seng Index Fund
• Return rate
• Weight of the sector of constituent stock
• Trustee fee
Redemption Fee
Management Fee Administration Fee Trustee Fee
Tracker Fund $ 15,000 for each
Up to 0.05% in respect of Net Asset Value to HK$ 15 billionUp to 0.045% in respect of Net Asset Value for the next HK$ 15 billionUp to 0.03% in respect of Net Asset Value for the next 15 billionUp to 0.025% in respect of Net Asset Value in excess of HK$ 45 billion
$80 per unit holder Same as Management Fee
Hang Seng Index Class A: NoClass B: 1% for holding less than 3 years
Class A: not applicableClass B: Up to 1%
Class A: Not applicableClass B: Up to 1% (currently waived by the manager)
Up to 0.1% in respect of Net Asset Value to HK$ 300,000,000Up to 0.06% in respect of Net Asset Value for the next HK$ 300,000,000Up to 0.03% in respect of Net Asset Value in excess of HK$ 600,000,000
The End of our The End of our presentationpresentationThank you for your Thank you for your attentionattention
Cheung Kai Yan, Irene Cheung Kai Yan, Irene (043011)(043011)
Chan Hiu Ting, Christine Chan Hiu Ting, Christine (043019)(043019)
Wan Kit Ying, Kitty (043020)Wan Kit Ying, Kitty (043020)
Law Fong Ting, Fonteyn Law Fong Ting, Fonteyn (043023)(043023)
Chan Sin Yan, Cyto Chan Sin Yan, Cyto (043024)(043024)