The Nikko AM E-Games Active ETF received approval from the SFC last week, according to the regulator’s website, making it available for sale to retail investors in Hong Kong.
The product is not listed yet on Hong Kong Stock Exchange (HKEX).
FSA contacted the firm, but no one was available to provide further details.
Nikko AM said in a recent report it was optimistic about companies in the e-game market. “There is a large, and ever-growing, cadre of game developers in China, South Korea, and the ASEAN countries. What’s more, 60% of the world’s population lives in Asia, and most have leapfrogged straight into the smartphone era.
“China alone counts nearly 700 million mobile gamers, even as most Asian countries are yet to leverage high-speed data communication networks,” the article added.
Moreover, the article cited data from Newzoo, a games and esports analytics provider, showing that they expect the mobile gaming market to grow by around 60% from 2018 to 2022 globally, to reach $95.4bn.
E-game themed ETFs also gained traction in the US market. For example, the Roundhill Bitkraft Esports and Digital Entertainment ETF was listed on NYSE last year.
Actively managed ETF
The Nikko product will also be the second actively-managed ETF in Hong Kong. In June last year, China International Capital Corporation (CICC) launched Hong Kong’s first active ETF, the ICBC CICC USD Money Market ETF. The product has amassed HK$3.49bn of assets since the launch, according to HKEX data.
ETFs are commonly known as passive investment products, designed to track the performance of an index or benchmark. But actively-managed ETFs have a manager making portfolio allocation decisions and therefore the product will not mirror the underlying index.
Jackie Choy, director of ETF Research in Asia at Morningstar, said previously that there is little difference between the basic investment strategy of active funds and actively-managed ETFs. However, he said active ETFs generally have cheaper fees than mutual funds, which could be an attraction for Hong Kong investors.
In Singapore, Nikko AM has 32 products for accredited investors and 29 funds for retail investors. For the funds available for both accredited and retail investors, only three are ETFs.
In 2019, the firm debuted a themed fund in Singapore that focuses on “disruptive innovation”.
The firm launched its first ETF in Hong Kong, the Nikko AM Global Internet ETF, in October last year. The product has collected HK$167.66m ($21.6m), according to the latest data from HKEX.
Nikko AM has $246.5bn of total assets under management as of the end of last year, according to the firm’s website.
