Tracker Fund bests a few blue chips

Business | Kevin Xu 12 Nov 2019

The Tracker Fund of Hong Kong (2800), which marks the 20th anniversary of its listing today, has given a total return of 270 percent since its launch, outperforming some blue-chip stocks including HSBC (0005) and CK Hutchison (0001).

Over the past two decades, the benchmark Hang Seng Index rose by about 90 percent as of November 8. For blue chips, the total returns for CK Hutchison was 150 percent, HSBC 76 percent, and Sun Hung Kai Properties (0016), 223 percent.

Tracker Fund holders will have made annualized returns of 7.6 percent since its initial public offering, inclusive of dividends, loyalty bonus units and unit price rises, Norman Chan Tak-lam, former Chief Executive of Hong Kong Monetary Authority, wrote in an article in September.

Its IPO in November 1999 raised HK$33.3 billion. The issue price per unit was HK$12.88, with HK$11.50 as the effective purchase price for retail investors when taking into account the loyalty bonus. More than 184,000 Hong Kong retail investors took part.

Tracker Fund of Hong Kong, the city's first exchange traded fund, was created for the SAR government to dispose of its HK$118 billion stock portfolio bought during the stock market operation in 1998 to defend the linked exchange rate system against attacks from international speculators.

"It quickly became obvious that an open-ended ETF that tracked the HSI would be an innovative and neat solution to our problem. Contrary to conventional disposal methods, the purchase of a basket of shares that replicated all the stocks in the index would unburden one from the difficult task of choosing the right stocks and the right time to buy," Chan wrote.

Shares of the Tracker Fund fell 2.52 percent to HK$27.1 yesterday.

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