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E Fund to terminate L&I products in Hong Kong

Competitor CSOP AM manages the same kind of products, which have become the largest L&I funds in the SAR.

E Fund Management in Hong Kong has decided to terminate its leveraged and inverse (L&I) products, which are the E Fund Yuanta Hang Seng Index Daily (-1x) Inverse Product and the Hang Seng Index Daily (2x) Leveraged Product.

The last trading day of the two products will be on 14 August, according to an exchange filing.

The firm decided to terminate both funds after taking into account their small net asset value, the filing reads. Assets of the leveraged product were only HK$20.7m ($2.7m), while the inverse product’s AUM is HK$32.14m, according to data from the exchange.

These are the only L&I products that E Fund manages, according to the firm’s website. Besides its L&I products, it has one ETF listed in Hong Kong, which is the E Fund CSI 100 A-Share Index ETF, and eight SFC-authorised mutual funds.

FSA sought more information from the firm, but it was not able to comment about the delisting.

E Fund partnered with Taipei-based Yuanta Securities Investment Trust in 2017 to launch both products. The inverse product was launched in March that year, while the leveraged product followed in August. Yuanta, which was already experienced in managing L&I products in Taiwan, is the named investment adviser of both funds.

Competitor CSOP Asset Management also manages three L&I products tracking the Hang Seng Index. However, they have gained more popularity and have become the three largest L&I ETFs in Hong Kong.

The CSOP HSI Daily (-2x) Inverse Product is the largest L&I product, with HK$ 7.03bn in assets, followed by the CSOP HSI Daily (2x) Leveraged Product, which has HK$1.03bn, according to HKEX data. Meanwhile, the CSOP HSI Daily (-1x) Inverse Product’s AUM is HK$630.24m.

The turnover of L&I products listed in Hong Kong reached a historical record high at HK$5.1bn in May, HKEX noted in a report. Inverse products saw a strong uptick in investor interest, particularly in -2x inverse products, which accounted for 70% of the total average daily turnover of the L&I products during the month.

In total, there are 25 L&I products listed in Hong Kong, with HK$9.2bn in assets as of the end of May, the report shows.

Part of the Mark Allen Group.