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HKEx: New Educational Article Examines ETFs As An Investment And Hedging Tool

Date 11/06/2002

Exchange Traded Funds (ETFs) are the focus of a new educational article by Dr. Louis T.W. Cheng, an Associate Professor in the Department of Business Studies at Hong Kong Polytechnic University, and Mr. Kevin Cheng, Vice President, Market Development and Education in Hong Kong Exchanges and Clearing Limited's (HKEx) Exchange Business Unit.

The article outlines the basics of ETFs and uses the Tracker Fund of Hong Kong (TraHK), which tracks the performance of the Hang Seng Index, to discuss premium and discount issues associated with ETFs. The authors also explain the benefits of ETFs and why investors use ETFs. In addition, they describe the ETFs available for trading in Hong Kong.

The article says "ETFs traded on HKEx provide investors instant diversification by tracking an index in Hong Kong or non-Hong Kong equity markets" and "ETFs are easy to trade and settle, low cost and transparent."

It also says the authors' analysis of the TraHK "shows that it is a very effective investment vehicle in defending its value during a down market and a volatile market."

"Exchange Traded Funds as an Investment/Hedging Tool" is the latest in a series of educational articles aimed at enhancing public understanding of the cash and derivatives markets and the important role they play in Hong Kong.

The article is available on the HKEx website http://www.hkex.com.hk/library/reports/derivatrpt.htm. Past educational articles are also available on the website.