HEAD-TO-HEAD: SSGA vs Value Partners

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The SPDR fund is managed by a team, according to Morningstar. The Value Partners fund is managed by a team under the quantitative investment solutions division, which is co-managed by directors David Quah and Kai Mak.

However, ETFs do not involve decision-making on investment selection. Other factors to consider in management of the ETF include longevity and investor base.

SPDR’s fund has a relatively longer history of 14 years while Value’s fund was launched since 2010.

SPDR’s fund was first launched in the US and was later made available for sale on the exchanges in Japan, Singapore, Hong Kong and Mexico. Ng said the fund probably has a wider and more international investor base than the Value Partners’ product.

On the flipside, Value likely has a majority of investment from local investors in Hong Kong, he added. Because the fund is listed in Hong Kong only, the AUM is much smaller than that of SPDR, Ng noted.

Currency denomination also matters, Ng said. Value’s gold ETF provides the option of different currencies, including the Hong Kong dollar, the renminbi and the US dollar. SPDR’s ETF in Hong Kong is only in local currency.

Finally, primary market activity, which influences AUM, should be considered by potential investors. Unlike the secondary market, primary market investors are able to create or redeem units in the ETFs by engaging with participating dealer. Potentially, the number of shares of the ETF would fluctuate by the creation and redemption.

The minimum price of unit creation for the Value product is HK$9.6m ($1.23m) for creating at least 300,000 units. The threshold for unit creation for the SPDR product is as much as HK$98m ($12.53m) for a broad lot of 100,000 units.

Moreover, a market maker is appointed for both ETFs to maintain market liquidity and offer bid-ask prices for both trading parties.

SPDR’s sole market maker is Commerz Securities Hong Kong.  Value’s fund has multiple market makers – Commerz Securities Hong Kong, Merrill Lynch Far East and Credit Suisse.

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