John Spence
ETFs to Cross-Trade in Hong Kong
John Spence
Thursday, April 19, 2001
The American Stock Exchange (AMEX) has taken another step toward its vision of a fungible global trading platform for exchange-traded funds (ETFs). Next stop: Hong Kong.
Hong Kong Exchanges and Clearing Limited (HKEx) has developed a new infrastructure to handle ETF trading in local time. According to Barclays Global Investors (BGI), six iShares will soon cross-trade on the HKEx. They are listed in the table below:
|
iShares MSCI Country ETF
|
Ticker
|
Expense ratio
|
Total assets (MM$)
|
3 mo. ret.
|
1 yr. ret.
|
3 yr. ann. ret
|
|
Australia
|
EWA
|
0.84%
|
43.6
|
-11.13%
|
-14.58%
|
-9.90%
|
|
Japan
|
EWJ
|
0.84%
|
550.7
|
-8.68%
|
-35.21%
|
1.52%
|
|
Malaysia (Free)
|
EWM
|
0.84%
|
84.7
|
-3.77%
|
-33.60%
|
-4.60%
|
|
Singapore (Free)
|
EWS
|
0.84%
|
54.0
|
-18.78%
|
-24.94%
|
-4.43%
|
|
South Korea
|
EWY
|
0.99%
|
16.5
|
1.50%
|
n/a
|
n/a
|
|
Taiwan
|
EWT
|
0.99%
|
103.3
|
17.63%
|
n/a
|
n/a
|
Source: Barclays Global Investors, all data as of 3/31/2001
The iShares ETFs will cross-trade in Hong Kong, which is a different arrangement than the cross-listing agreement AMEX recently inked with the Singapore Exchange. The iShares will not be registered in Hong Kong, and will be introduced under a "trading only" arrangement. In effect, BGI will not be able to market its products in Hong Kong, and must rely on broker-dealers to drum up retail interest.
BGI said the South Korea and Taiwan ETFs are scheduled to begin trading on May 2.
According to a company spokesperson , BGI is also planning to launch a new iShare based on the MSCI China Free Index. The ETF will begin trading in Hong Kong in late May or early June.
Global Titans Index Calculated in Euro
The Dow Jones Global Titans 50 index, which is comprised of international blue-chip companies, is now calculated in Euros. Dow Jones said the index will serve as the reference point for the intraday valuation of ETFs that will soon be launched in Europe.
Morgan Stanley to Launch Socially Responsible Index Fund
Socially Responsible Investing (SRI) continues to gain popularity. Morgan Stanley Dean Witter & Co. filed with the SEC to launch an index fund that will track the new KLD Large Cap Social Index. The index was developed by Kinder, Lydenberg, Domini & Co. (KLD), and is comprised of companies in the Russell 1000 index that pass KLD's social screening process.
KLD is also working on a broad market SRI index with securities culled from Russell 3000 index, according to Peter Kinder, president of KLD. The research firm is known for its Domini 400 Social Index, first introduced in 1990. The Domini Social Equity Index Fund (DSEFX), which has been around since 1991, held almost $1.2 billion in assets at the end of March, according to Morningstar. The chart below shows the performance of the fund since the beginning of July 1996:
Source: Reuters
Sometimes it pays to be good - that is, until the tech sector tanks. Here's how the fund stacks up against the S&P 500:
| Fund/index |
3 mo. ret. |
1 yr. ret. |
3 yr. ret. ann. |
5 yr. ret ann. |
| Domini Social Equity |
-12.24%
|
-27.42%
|
2.15%
|
14.01%
|
| S&P 500 |
-11.85%
|
-21.67%
|
3.05%
|
14.18%
|
Source: Morningstar, all data as of 3/31/2001
Socially responsible investing was a great way to feel good about yourself and rack up impressive returns during the late 1990s, since many of the SRI funds were overweighted in technology stocks. As of the end of March, the Domini Social Equity Index Fund had a 24.8% weighting in tech, while the S&P 500 had a 19.1% allocation, according to Morningstar.
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