Samsung Asset Management has unveiled its first crypto asset ETF in Hong Kong, an actively managed fund providing exposure to bitcoin by investing in futures contracts.
Hong Kong is the first jurisdiction in Asia to permit the trading of retail-facing crypto investment products.
The Samsung Bitcoin Futures Active ETF (3135 HK) has been listed on the Stock Exchange of Hong Kong in Hong Kong dollars.
The fund enables access for both retail and institutional investors to the world’s largest cryptocurrency. It invests in bitcoin futures contracts and micro bitcoin futures contracts traded on the Chicago Mercantile Exchange (CME).
While the ETF aims to approximate the spot price performance of bitcoin by investing predominately in front-month bitcoin futures contracts, Samsung AM notes that the fund’s active management allows some flexibility in portfolio composition in order to deliver an enhanced rollover strategy (depending on the presence of either contango or backwardation in the bitcoin futures market) and better handling of any market disruption events.
The ETF comes with estimated ongoing charges over a year of 0.95%, less than half the cost of the actively managed CSOP Bitcoin Futures ETF (3066 HK) which is priced at 2.00%. The CSOP Bitcoin Futures ETF and CSOP Ether Futures ETF (3068 HK) became the first retail-facing crypto asset investment products in Hong Kong following their launch in December 2022.
Despite a major rout in crypto asset prices last year, Hong Kong has pushed ahead with plans to become Asia’s central hub for the digital assets industry. Following an announcement from the Securities and Futures Commission (SFC) near the end of 2022, the city is currently the only jurisdiction in Asia to permit the trading of retail-facing crypto investment products.
That announcement led to a flurry of interest from prospective ETF issuers with Mirae Asset Global Investments also currently in the process of bringing futures-based crypto asset ETFs to market.
Directly replicating crypto asset ETFs, however, have not yet passed muster with the SFC, perhaps reflecting concerns regarding validating the ownership of these funds’ underlying tokens.