Nikko debuts in Hong Kong with global internet ETF

Oct 25th, 2019 | By | Category: Equities

Tokyo-headquartered Nikko Asset Management has introduced its first ETF in Hong Kong with the launch of the Nikko AM Global Internet ETF on the Stock Exchange of Hong Kong.

Eleanor Seet, Head of Asia ex-Japan at Nikko Asset Management

Eleanor Seet, Head of Asia ex-Japan at Nikko Asset Management.

The thematic equity fund provides exposure to leading internet companies globally.

It is linked to the iEdge-FactSet Global Internet Index, an in created by SGX Index Edge, the indexing division of Singapore Stock Exchange, and data provider FactSet.

The index selects its constituents from a universe of developed market stocks with market capitalizations greater than $200 million that also meet liquidity and free-float thresholds.

The methodology then uses FactSet’s Revere Business Industry Classification System (RBICS) to determine which stocks are aligned with the internet theme by examining revenue derived from 34 relevant business segments.

These segments include blockchain technology, internet support services, internet entertainment, online games, virtual reality, and various e-commerce activities, amongst others. Eligible companies must derive at least half of their total revenue from these segments.

Companies passing through this screening stage are ranked by free-float market capitalization and the 30 largest stocks are chosen for index inclusion. Constituents are weighted by float-adjusted market cap, subject to a 10% limit per security. Reconstitution and rebalancing occur semi-annually.

The index is heavily tilted towards US stocks, which make up in excess of half the index’s weight, followed by China with around one-third weight. Six stocks currently have their weight capped at 10%: Alibaba, Alphabet, Amazon, Facebook, Netflix, and Tencent.

The ETF comes with an expense ratio of 0.60% and is available to trade in US dollars (9072 HK) or Hong Kong dollars (3072 HK).

Eleanor Seet, Head of Asia ex-Japan at Nikko Asset Management, commented, “This is Nikko AM’s first ETF offering in Hong Kong, and we are pleased to have the partnership of SGX through the iEdge-FactSet Global Internet Index.

“The Nikko AM Global Internet ETF provides investors with easy and low-cost access to the world’s internet titans, across trending themes such as e-commerce, internet of things, social networking, cloud services, and e-gaming.  As a leading ETF issuer in an increasingly challenging environment, we are committed to delivering progressive and relevant solutions to our investors.”

Simon Karaban, Head of Index Services at SGX, added, “There is an increasing allocation of global assets to thematic-based investing and we are proud to be at the forefront of developing innovative and respected index-based solutions for our product partners.

“The iEdge-FactSet series of thematic indices offer flexibility and choice for investors who can better express their view on a range of emerging trends across global markets. We are pleased to be partnering with Nikko AM in licensing the iEdge-FactSet Global Internet Index, drawing on our respective strengths to offer a compelling solution for investors.”

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