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SSIF DCE Iron Ore Futures Index ETF
HKEx listed, Stock Code:
HKD: 3047
USD: 9047
Important Information
  • The Sub-Fund is a futures based ETF. The risks of investing in the Sub-Fund are therefore greater than those of investing in other types of ETF. In particular investment in futures contracts involves specific risks such as high volatility, leverage, rollover and margin risks. Here are the risks which investors may face:
  • This is a complex product. Investors should exercise caution in relation to the product.
  • 1. Investment risk
  • -The Sub-Fund’s investment portfolio may fall in value due to any of the key risk factors below and therefore your investment in the Sub-Fund may suffer losses. There is no guarantee of the repayment of principal.
  • 2. New product risk
  • The Sub-Fund is a futures-based ETF investing directly in DCE Iron Ore Futures Contracts. The novelty and untested nature of such an ETF and the fact that the Sub-Fund is one of the first few futures-based ETFs in Hong Kong makes the Sub-Fund potentially riskier than traditional ETFs investing in equity securities.
  • -The Sub-Fund is the first exchange traded fund managed by the Manager. As such, the Manager will substantially make use of and rely upon the risk management tools to support the investments of the Sub-Fund. In the event of a breakdown or disruption in such tools, the operations of the Sub-Fund may be adversely affect.
  • 3. Iron ore market risk
  • -Concentration / single commodity risk: As the exposure of the Sub-Fund is concentrated in the iron ore market, it is more susceptible to the effects of iron ore price volatility than more diversified funds.
  • -Iron ore commodity volatility risk: Iron ore prices are highly volatile and may fluctuate widely and may be affected by numerous events or factors such as production decisions by other iron ore producers, complex interaction of supply and demand of iron ore, economic conditions, speculator’s activities and financial market conditions.
  • 4. Futures contracts risk
  • -Contango risk: A “roll” occurs when a new main DCE Iron Ore Futures Contract is determined and is replaced in the Underlying Index with the next main DCE Iron Ore Futures Contract. Where the Underlying Index is calculated with reference to these DCE Iron Ore Futures Contracts, the value of the Underlying Index (and so the NAV per Unit) may be adversely affected by the cost of rolling positions forward (due to the increased price of the DCE Iron Ore Futures Contract, i.e. “contango”).
  • -Volatility risk: The price of DCE Iron Ore Futures Contracts can be highly volatile and is influenced by, among other things, interest rates, changing market supply and demand relationships, trade, fiscal, monetary and exchange control programs and policies of governments.
  • -Leverage risk: Because of the low margin deposits normally required in futures trading, an extremely high degree of leverage is typical of a futures trading account. As a result, a relatively small price movement in a DCE Iron Ore Futures Contract may result in a proportionally high impact and substantial losses to the Sub-Fund, having a material adverse effect on the NAV. Like other leveraged investments, a futures transaction may result in losses in excess of the amount invested.
  • -Liquidity risk: The Underlying Index is calculated with reference to DCE Iron Ore Futures Contracts exposing the Sub-Fund and the investors to a liquidity risk linked to DCE Iron Ore Futures Contracts which may affect their value.
  • -Margin risk: Generally, most leveraged transactions, such as DCE Iron Ore Futures Contracts, involve the posting of margin or collateral. Increases in the amount of margin or collateral or similar payments may result in the need for the Sub-Fund to liquidate its investments at unfavourable prices in order to meet margin or collateral calls. This may result in substantial losses to unitholders.
  • 5. Risk of material non-correlation with spot/current market price of iron ore
  • -As the Underlying Index is based upon DCE Iron Ore Futures Contracts but not on physical iron ore, the performance of the Underlying Index may substantially differ from the current market or spot price performance of the iron ore. Accordingly, the Sub-Fund may underperform a similar investment that is linked to the spot price of iron ore.
  • 6. Position limits risk
  • The DCE has stipulated speculative position limits for DCE Iron Ore Futures Contracts. Based on the rollover schedule, these speculative position limits are not currently expected by the Manager to affect the Sub-Fund, although the Manager cannot guarantee that the circumstances (such as rolling schedule, DCE Iron Ore Futures Contracts’ expiry dates) will remain unchanged. If the Sub-Fund exceeds a speculative position limit, its ability to seek additional exposure by acquiring further DCE Iron Ore Futures Contracts as a result of new creations of Units could be impaired, the Sub-Fund’s ability to achieve its investment objective could be affected and, as a result, the Manager could be required to suspend new creations of Units. This may result in divergence between the trading price of the Unit and the NAV per Unit.
  • 7. Government intervention and restriction
  • -There may be substantial government intervention in the economy, including restrictions on investment in companies or industries deemed sensitive to relevant national interests. Governments and regulators may also intervene in the financial markets, such as by the imposition of trading restrictions, a ban on “naked” short selling or the suspension of short selling for certain stocks. Such interventions may be unpredictable, affect the trading, operation and market making activities of the Sub-Fund and may also lead to an increased tracking error for the Sub-Fund. Furthermore, such market interventions may have a negative impact on the market sentiment which may in turn affect the performance of the Underlying Index and as a result the performance of the Sub-Fund. In worst case scenario, the investment objective of the Sub-Fund cannot be achieved.
  • 8. Investment in other funds risk
  • -The Sub-Fund may invest in money market funds authorised by the SFC. Although such funds will be regulated in Hong Kong, the Sub-Fund will be exposed to the risk of investing in another management company’s fund with all the related risks which attach to funds generally and bear the fees and expenses of the underlying funds. These charges will be in addition to the fees payable by the Sub-Fund.
  • 9. Trading differences risk
  • As the DCE may be open when Units in the Sub-Fund are not priced, the value of any iron ore futures contracts in the Sub-Fund’s portfolio may change substantially when investors will not be able to purchase or sell the Sub-Fund’s Units. Further the price of DCE Iron Ore Futures Contracts listed on the DCE may not be available during part of or all of the SEHK trading sessions due to trading hour differences which may result in Units of the Sub-Fund being traded at a premium or discount of the Unit price to its NAV.
  • 10. Other currency distribution risk
  • -Investors should note that all Units will receive distribution in USD only. In the event that the relevant unitholder has no USD account, the unitholder may have to bear the fees and charges associated with the conversion of such distribution from USD to HKD or other currency. The unitholder may also have to bear bank or financial institution fees and charges associated with the handling of the distribution payment. Unitholders are advised to check with their brokers regarding arrangements for distributions.
  • 11. Emerging market risk
  • The Sub-Fund may invest in Mainland China. Investing in the Mainland China market is subject to the risks of investing in emerging markets which may involve increased risk and special considerations not typically associated with investment in more developed markets, such as liquidity risks, currency risks/control, political and economic uncertainties, legal and taxation risk, settlement risk, custody risk and the likelihood of a high degree of volatility.
  • 12. Currency exchange risk
  • -Assets of the Sub-Fund may be denominated in currencies other than USD and the underlying DCE Iron Ore Futures Contracts are denominated in RMB, whilst the Sub-Fund is denominated in USD. The SubFund is subject to transaction costs in the exchange of such other currencies to USD. The performance and the NAV of the Sub-Fund may therefore be affected unfavourably by movements in the exchange rate between USD and such other currencies and changes in exchange rate control policies.
  • 13. Dual counter trading risk
  • -If there is a suspension of the inter-counter transfer of Units between the counters and/or any limitation on the level of services by brokers and CCASS participants, unitholders will only be able to trade their Units in the relevant counter on the SEHK, which may inhibit or delay an investor dealing.
  • -The market price on the SEHK of Units traded in USD and of units traded in HKD may deviate significantly. As such investors may pay more or receive less when buying or selling Units traded in USD on the SEHK than in respect of Units traded in HKD and vice versa.
  • 14. Reliance on market makers risk
  • -Although the Manager ensures that at least one market maker will maintain a market for the Units traded in each counter and that at least one market maker to each counter gives not less than 90 days prior written notice to terminating market making arrangement, under the relevant market maker agreement, liquidity in the market for the Units may be adversely affected if there is no or only one market maker for the USD or HKD traded Units. There is also no guarantee that any market making activity will be effective.
  • 15. Tracking error risk
  • -The Sub-Fund may be subject to tracking error risk, which is the risk that its performance may not track that of the Underlying Index exactly. Factors such as the fees and expenses of the Sub-Fund, inability to rebalance the Sub-Fund’s holdings of Futures Contracts to track the Underlying Index, rounding of the Futures Contracts’ prices, and changes to the regulatory policies may affect this tracking error. The Manager will monitor and seek to manage such risk minimising tracking error. There can be no assurance of exact or identical replication at any time of the performance of the Underlying Index.
  • 16. Trading risks
  • -The trading price of the Units on the SEHK is driven by market factors such as the demand and supply of the Units. Therefore, the Units may trade at a substantial premium or discount to the Sub-Fund’s NAV.
  • As investors will pay certain charges (e.g. trading fees and brokerage fees) to buy or sell Units on the SEHK, investors may pay more than the NAV per Unit when buying Units on the SEHK, and may receive less than the NAV per Unit when selling Units on the SEHK.
  • 17. Termination risks
  • -The Sub-Fund may be terminated early under certain circumstances, for example, where the Underlying Index is no longer available for benchmarking or if the size of the Sub-Fund falls below USD 10 million. Investors may not be able to recover their investments and suffer a loss when the Sub-Fund is terminated.
  • 18. Passive investment risk
  • -The Sub-Fund is passively managed and the Manager will not have the discretion to adapt to market changes due to the inherent investment nature of the Sub-Fund. Falls in the Underlying Index are expected to result in corresponding falls in the value of the Sub-Fund.
  • 19. PRC tax risk
  • -There are risks and uncertainties associated with the current PRC tax laws, regulations and practice in respect of the trading of DCE Iron Ore Futures Contracts (which may have retrospective effect). Any increased tax liabilities on the Sub-Fund may adversely affect the Sub-Fund’s value.
  • -Based on professional and independent tax advice, the Manager does not intend to make any PRC tax provision on the trading of DCE Iron Ore Futures Contracts.
  • 20. Risk relating to distributions paid out of capital
  • -Payment of distributions out of or effectively out of capital represents a return or a withdrawal of part of the amount they originally invested or capital gain attributable to that amount. Any such distributions may result in an immediate reduction of the NAV per Unit of the Sub-Fund.
Key Features
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  • Futures-based ETF
  • USD&HKD Trading
  • Tracking DCE Iron Ore Futures Price Index (The Manager will adopt a full replication strategy to track the underlying index, and achieve close correlation with the underlying index.)
  • Avoid the trivial matter to keep rolling futures, and through designated futures brokers to execute the change of positions.
Fund Objective and Investment Strategy
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Fund Type Passive Index ETF
Underlying Index DCE Iron Ore Futures Price Index
Investment Objective

The investment objective of the Sub-Fund is to provide investment results that, before deduction of fees and expenses, closely correspond to the performance of the DCE Iron Ore Futures Price Index (“Underlying Index”). There is no assurance that the Sub-Fund will achieve its investment objective.

Investment Strategy

In order to achieve the investment objective of the Sub-Fund, the Manager will primarily adopt a full replication strategy by investing directly in DCE Iron Ore Futures Contracts so as to give the Sub-Fund the performance of the Underlying Index. In entering into the DCE Iron Ore Futures Contracts, the Manager anticipates that no more than 20% of the NAV of the Sub-Fund from time to time will be used as margin to acquire the DCE Iron Ore Futures Contracts.

 

Not less than 80% of the NAV of the Sub-Fund in cash (USD) will be applied by the Manager towards (i) holding cash (USD) as deposits with banks in Hong Kong and/or (ii) investing up to 80% of the NAV in money market funds denominated in different currencies such as USD, HKD and RMB (but less than 30% of the NAV in each money market fund) authorised by the SFC in accordance with the requirements of the Code. Yields from such cash and money market funds will be used to meet the Sub-Fund’s fees and expenses and after deduction of such fees and expenses the remainder will be distributed by the Manager to unitholders in USD.

 

Other than DCE Iron Ore Futures Contracts, the Manager has no intention to invest the Sub-Fund in any financial derivative instruments (including structured products or instruments) for hedging or non-hedging (i.e. investment) purposes. The Manager will seek the prior approval of the SFC and provide at least one month’s prior notice to unitholders before the Manager engages in any such investments.

 

The rolling strategy of the Sub-Fund will mimic that of the Underlying Index methodology so as to closely track the Underlying Index. For the Sub-Fund, the roll will take place over a 5-day period as stated in the Underlying Index methodology.

 

The Manager does not currently intend to enter into securities lending transactions and repurchase transactions and other similar over-the-counter transactions on behalf of the Sub-Fund. Should this intention change in the future, the SFC’s prior approval will be sought and at least one month’s prior notice will be given to unitholders.

Exchange Listing SEHK - Main Board
Base Currency US Dollars (USD)
Trading Currency USD Counter: US Dollar (USD)
HKD Counter: Hong Kong Dollar (HKD)
Trading lot size 100 Units
Creation/Redemption USD cash
Manager Shanxi Securities International Asset Management Limited
Trustee& Registrar HSBC Institutional Trust Services (Asia) Limited
PRC Custodian (Designated Depository Bank) HSBC Bank (China) Company Limited

 

Appropriation
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Leverage No
Actively Managed No
Swap Base No
Derivatives Base Yes
Securities Lending No
Intra-day Estimated NAV
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  Date Time (HKD#) (USD)
Intra-Day Estimated NAV per Unit *
Intra-Day Market Price 1
Market Information
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  Date Last Change Change(%)
Official NAV per Unit in USD 2020-07-14 1.3441 0.0222 1.68
Closing Price per Unit in USD 2020-07-14 1.3200 0.0000 0.00
Fund Information
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Fund Inception Date 2020-03-27
SEHK Listing Date 2020-03-27
Financial Year Ending 31 December each year
Asset Class Commodity
Equity Exposure Futures-Based
Domicile Hong Kong
Total NAV(USD) 14,919,678.38 as of 2020/07/14
Outstanding Units 11,100,000.00 as of 2020/07/14
Management Fee 1.2% per annum
Trustee Fee 0.10% per annum for the first USD50 million of the NAV and 0.08% per annum for the remaining balance of the NAV, subject to a monthly minimum of USD10,000
Ongoing Charges Over a Year^ 1.82%
Base Currency USD

 

  • ^As the Sub-Fund is newly set up, this figure is a best estimate only and represents the sum of the estimated ongoing charges expressed as a percentage of the estimated average Net Asset Value (“NAV”). It may be different upon actual operation of the Sub-Fund and may vary from year to year.
Index Information
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Underlying Index DCE Iron Ore Futures Price Index
Index Description The Underlying Index is comprised of DCE Iron Ore Futures Contracts. The specific DCE Iron Ore Futures Contracts included in the Underlying Index is the main DCE Iron Ore Futures Contract, which is the DCE Iron Ore Futures Contract with the largest open interest, and if there are two DCE Iron Ore Futures Contracts with the same open interest, then main DCE Iron Ore Futures Contract would be the contract with the larger trading volume. If there are two DCE Iron Ore Futures Contracts with same open interest and trading volume, then the one with a later expiry month would be the main DCE Iron Ore Futures Contract. The index was launched on 7 April 2017 and had a base level of 1,000 on 18 October 2013. The Underlying Index is denominated in RMB (CNY).
Index Provider Dalian Commodity Exchange (DCE)
Currency RMB (CNY)
Trading Information
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Exchange Hong Kong Stock Exchange- Main Board
Date of Listing / Dealing 27 March 2020
Primary Exchange Time Zone GMT+8
Exchange Ticker USD Counter: 09047
HKD Counter: 03047
Bloomberg Ticker USD Counter: 9047 HK
HKD Counter: 3047 HK
ISIN USD: HK0000591633
HKD: HK0000591641
Trading Board Lot 100 Unit
Trading Currency USD and HKD
Participating Dealer
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Shanxi Securities International Limited
Goldman Sachs (Asia) Securities Limited
China Securities (International) Brokerage Company Limited
Haitong International Securities Company Limited
Phillip Securities (Hong Kong) Limited
HGNH International Securities Co., Limited
Xin Yongan International Securities Company Limited
Market Maker
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AP Capital Management (Hong Kong) Limited
Index Disclaimer
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DCE iron ore futures price index is prepared by Dalian Commodity Exchange, and its ownership belongs to Dalian Commodity Exchange. Dalian Commodity Exchange will take all necessary measures to ensure the accuracy of the index, but will not make any guarantee for this and will not be responsible to anyone for any error of the index.

(The above excerpt is translated from index license agreement signed by DCE and SSIF. In case of dispute, Chinese shall prevail)

Data Provider's Disclaimer
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Any information or data that Wind provides is for reference,Wind shall not be responsible for any losses or damages caused to the Subscribe or customers of the Subscriber arising from using the Database provided that such information or data and services are provided in accordance with professional standards and with sufficient care,diligence and skill.

(source:the subscription agreement signed by Wind and SSIF.)

 

Note: AASTOCKS.com Ltd, HKEx Information Services Limited, China Investment Information Services Limited, Shenzhen Securities Information Co., Ltd., respective holding companies and/or any subsidiaries of such holding companies and/or respective third party data provider(s) endeavour to ensure the accuracy and reliability of the Information provided but do not guarantee its accuracy or reliability and accept no liability (whether in tort or contract or otherwise) for any loss or damage arising from any inaccuracies or omissions.

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Investment always involves risks. Shanxi Securities International Asset Management Limited (CE# BEN407) is licensed with the Securities and Futures Commission to carry on Type 4 (advising on securities), Type 5 (advising on futures contracts and Type 9 (asset management) regulated activities, as defined under the Securities and Futures Ordinance of Hong Kong (Cap. 571). This website provides general information about Shanxi Securities International Asset Management Limited, its business and its products. Shanxi Securities International Asset Management Limited reserves the right at any time to modify, update, edit or delete contents on this website without any earlier notice. Investors must not rely on the contents of this website when making any investment decisions. The Offering document should be read for further details including the risk factos. Past performance does not indicate or guarantee any future performance.

This website is prepared by Shanxi Securities International Asset Management Limited and have not been reviewed by the Securities and Futures Commission in Hong Kong.