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Tracker Fund Of Hong Kong

2800.HK:HKEX

equity ETF | passive | Hang Seng Investment Management Limited | Tracks Hang Seng Indexes Company Limited

Market Price

HK$26.86 (22 Jan 2026)

+31.89% (YoY)

NAV

HK$26.71

+0.55% Premium

Yield

2.98%

-22.22% (YoY)

Expense Ratio

0.07%

-89% vs Avg: 0.65%

Box Set (ETF)

⚡ Executive Summary

📊 The Bottom Line

This ETF tracks the Hang Seng Index, providing exposure to the largest and most liquid companies listed in Hong Kong. With a remarkably low expense ratio of 0.07%, it offers a cost-efficient way to access the Hong Kong equity market. Bull case projects NAV reaching approximately HK$32.05 (+20%) while bear case suggests HK$21.37 (-20%) over 12-18 months.

⚖️ Risk vs Reward

The underlying Hang Seng Index currently trades at a P/E ratio of 14.3x, which is above its 3-year average of 12.2x, suggesting a fair but not cheap valuation compared to recent history. Hong Kong equities have seen strong returns in 2025, but face ongoing macroeconomic uncertainties in mainland China and global interest rate policy shifts. The ETF offers significant upside if the Hong Kong market continues its recovery and corporate earnings accelerate. However, downside risks stem from potential economic slowdowns and geopolitical tensions. Its tight tracking and high liquidity mitigate ETF-specific risks, making it a robust vehicle for targeted exposure to Hong Kong large-cap equities.

🚀 Why 2800.HK Could Soar

• Continued economic recovery in mainland China could boost corporate earnings of Hong Kong-listed companies, as many constituents have significant mainland exposure.
• Potential for further interest rate cuts by global central banks, including the Federal Reserve, could improve investor sentiment towards risk assets and enhance market liquidity in Hong Kong.
• Attractive valuations for some Hang Seng Index constituents relative to global peers, presenting a potential re-rating opportunity as market sentiment improves.

⚠️ What Could Go Wrong

• A sharper-than-expected economic slowdown in mainland China could negatively impact the earnings and outlook for many Hong Kong-listed companies.
• Increased geopolitical tensions or regulatory uncertainties between major global powers could weigh heavily on investor confidence in the Hong Kong market.
• Persistent weakness in the property sector could spill over into the broader financial system, affecting the performance of financial stocks, which have a significant weighting in the index.

🏢 Fund Overview

What Are You Actually Buying

The Hang Seng Index represents the performance of the largest and most liquid companies listed on the Stock Exchange of Hong Kong, acting as a barometer for Hong Kong's equity market health.
Composed primarily of large-cap companies across diversified sectors, including financials, consumer cyclicals, communication services, and technology, reflecting Hong Kong's role as a major financial and trading hub.
Hong Kong equities are often influenced by economic developments in mainland China due to strong trade ties and the significant presence of mainland Chinese companies listed in Hong Kong.

Market Dynamics & Outlook

The Hong Kong market recently traded at a P/E ratio of 14.3x, above its 3-year average of 12.2x, indicating a more optimistic valuation compared to the past few years.
After underperforming for several years, Hong Kong equities saw strong returns in 2025, with the MSCI AC Asia index delivering a 30.2% return in USD terms, driven by broad regional recovery.
Investors are showing increased optimism in the market's long-term growth prospects, though specific sectors like healthcare are attracting significant future growth expectations despite current valuations.

🎯 Why This Matters

Investing in the Tracker Fund of Hong Kong offers direct exposure to the performance of Hong Kong's blue-chip companies. Understanding the current valuation and the strong influence of China's economic performance is key for investors seeking diversified exposure to the Asian market, particularly given the recent rebound in the region.

📈 Valuation & Analysis

Historical Performance

YTD

+4.17%

+27.64%

Yearly Growth (3Y)

+8.90%

Yearly Growth (5Y)

-1.31%

Yearly Growth (10Y)

+1.46%

Yearly Growth (Since Inception)

+2.23%

Current Valuation

The Tracker Fund of Hong Kong, which closely mirrors the Hang Seng Index, has an aggregate Price-to-Earnings (P/E) ratio for its underlying holdings of 12.65x as of October 31, 2025. This is slightly below the broader Hong Kong market P/E of 14.3x as of January 2026, but also below the Hang Seng Index P/E of 18.66x as of January 2026 (based on EWH ETF benchmark). The ETF's Price-to-Book (P/B) ratio stands at 1.45x. The current dividend yield is 2.94% (calculated based on Yahoo Finance data). While the market has seen some optimistic valuation expansion from its 3-year average, the ETF's holdings generally reflect a fair valuation without being excessively stretched.

The Bull Case - Upside to

Mainland China's Economic Rebound

Medium Probability

Stronger-than-expected GDP growth in mainland China could significantly boost earnings for Hang Seng Index constituents with deep ties to the mainland, potentially driving a 15-20% appreciation in the ETF's NAV over 12 months.

Positive Policy Support and Stimulus

Medium Probability

Targeted fiscal and monetary policy easing by Chinese authorities could inject liquidity and confidence into the market, leading to a re-rating of Hong Kong equities and an estimated 10-15% NAV uplift.

Increased Foreign Investment Inflows

Low Probability

A global shift towards undervalued Asian assets, coupled with improved investor sentiment, could lead to substantial foreign capital inflows into Hong Kong, supporting higher valuations and a 5-10% boost to NAV.

The Bear Case - Downside to

Persistent Property Sector Weakness

Medium Probability

A prolonged downturn in China's property market could trigger broader financial instability and impact banks and developers in the HSI, leading to a potential 15-20% decline in the ETF's NAV.

Escalation of Geopolitical Tensions

Medium Probability

Increased trade tensions or geopolitical conflicts between major global powers could severely dampen investor confidence, leading to capital outflows and a 10-15% drop in Hong Kong stock valuations and the ETF's NAV.

Unfavorable Regulatory Environment

Low Probability

New or stricter regulatory measures, particularly in technology or financial sectors, could negatively impact the growth prospects and profitability of key HSI companies, potentially reducing NAV by 5-10%.

Risk/Reward Assessment

The risk-reward profile for the Tracker Fund of Hong Kong appears balanced, with potential upside driven by a resilient mainland China economy and supportive government policies. Should these catalysts materialize, the diversified exposure to Hong Kong's blue chips could see significant gains. However, investors must weigh these prospects against notable downside risks, particularly the ongoing challenges in China's property sector and the potential for geopolitical volatility. While the ETF offers a robust and liquid mechanism to gain exposure, the fundamental performance remains tied to the broader economic and political landscape of the region. A cautious approach, monitoring key macroeconomic indicators and policy developments, is warranted.

Peer Comparison

• The Tracker Fund of Hong Kong boasts an exceptionally low expense ratio of 0.07%, significantly undercutting its closest peers and making it one of the most cost-efficient ways to access the Hang Seng Index. • With its substantial Assets Under Management (AUM) of over HK$136 billion, it offers superior liquidity and tighter bid-ask spreads compared to smaller, less liquid Hong Kong equity ETFs. • It provides direct physical replication of the Hang Seng Index, ensuring close tracking and minimal deviation from its benchmark's performance, a critical factor for passive investors. • While peer ETFs like iShares MSCI Hong Kong ETF (EWH) offer exposure to Hong Kong equities, their higher expense ratios and different index methodologies (MSCI Hong Kong 25-50 Index vs. Hang Seng Index) may result in varying performance characteristics and higher costs for investors.

Fund	Expense Ratio	AUM (B)	1Y Return	3Y Return	5Y Return	Yield
Tracker Fund Of Hong Kong (2800.HK) ⭐	0.07%	HK$136.2B	27.64%	8.90%	-1.31%	0.03%
iShares MSCI Hong Kong ETF (EWH)	0.50%	HK$0.7B	34.89%	5.09%	0.89%	0.03%

🎯 Why This Matters

The valuation and performance analysis reveal that the Tracker Fund of Hong Kong offers a compelling, cost-effective avenue to invest in the Hong Kong equity market. Investors should consider its strong liquidity and benchmark alignment, while carefully assessing the macroeconomic factors influencing its underlying holdings.

📊 Appendix

Top 10 Holdings (80+ of ETF Value)

#	Ticker	Logo	Name	Sector	Weight
1	09988	A	Alibaba Group Holding Ltd	Consumer Cyclical	0.1%
2	00005	H	HSBC Holdings PLC	Financial Services	0.1%
3	00700	T	Tencent Holdings Ltd	Communication Services	0.1%
4	00939	C	China Construction Bank Corp	Financial Services	0.1%
5	01299	A	AIA Group Ltd	Financial Services	0.0%
6	01810	X	Xiaomi Corp	Technology	0.0%
7	03690	M	Meituan	Consumer Cyclical	0.0%
8	00941	C	China Mobile Ltd	Communication Services	0.0%
9	00388	H	Hong Kong Exchanges and Clearing Ltd	Financial Services	0.0%
10	01398	I	Industrial And Commercial Bank Of China Ltd	Financial Services	0.0%

Fund Mechanics

How It Works

The Tracker Fund of Hong Kong ("TraHK") is a passively managed exchange-traded fund designed to provide investment results that closely correspond to the performance of the Hang Seng Index ("Index"). The fund's manager, Hang Seng Investment Management Limited, achieves this objective by investing all, or substantially all, of TraHK's assets in shares of the constituent companies of the Hang Seng Index, maintaining substantially the same weightings as they appear in the Index. The Index is a market-capitalization-weighted index, ensuring that larger companies have a greater impact on the fund's performance. The fund employs a physical replication method, holding the actual underlying stocks rather than derivatives.

Holdings Breakdown

Number of Holdings

Top 10 Concentration

5379.0%

Top 20 Concentration

6937.0%

Category	Weight	Description
Financial Services	32.5%	Exposure to Hong Kong's robust banking, insurance, and investment sectors.
Consumer Cyclical	23.1%	Includes companies sensitive to economic cycles, such as e-commerce and retail.
Communication Services	16.3%	Covers telecommunication providers and media/entertainment companies.
Technology	7.9%	Features technology hardware and software companies.
Energy	4.3%	Comprises oil, gas, and other energy-related companies.
Real Estate	3.6%	Exposure to property developers and real estate investment trusts.
Industrials	3.1%	Includes companies involved in aerospace, defense, machinery, and construction.
Healthcare	3.0%	Covers pharmaceutical, biotechnology, and healthcare equipment firms.
Utilities	2.5%	Companies providing essential services like electricity and gas.
Consumer Defensive	2.1%	Less sensitive to economic cycles, such as food and beverage companies.
Basic Materials	1.7%	Companies involved in mining, chemicals, and construction materials.

Cost Efficiency

Expense Ratio

0.07%

Median Bid-Ask Spread

0.050%

Performance History

Year	ETF Return	Benchmark Return	Tracking Diff	Volatility	Max Drawdown	Sharpe Ratio
2024	22.00%	22.90%	-0.90%	N/A	N/A	N/A
2023	-10.40%	-10.50%	0.10%	N/A	N/A	N/A
2022	-11.90%	-12.50%	0.60%	N/A	N/A	N/A
2021	-11.90%	-11.80%	-0.10%	N/A	N/A	N/A
2020	-0.50%	-11.80%	11.30%	N/A	N/A	N/A
2019	12.70%	-0.30%	13.00%	N/A	N/A	N/A
2018	-10.40%	13.00%	-23.40%	N/A	N/A	N/A
2017	40.50%	-10.50%	51.00%	N/A	N/A	N/A
2016	3.70%	0.30%	3.40%	N/A	N/A	N/A
2015	-4.10%	-7.40%	3.30%	N/A	N/A	N/A

Annualized Return Since Inception

2.23%

Detailed Peer Comparison

Ticker	Name	Issuer	Exp Ratio	AUM (B)	1Y	3Y	5Y	Yield	StdDev 3Y	Sharpe 3Y	Spread
2800.HK ⭐	Tracker Fund Of Hong Kong	Hang Seng Investment Management Limited	0.07%	HK$136.2B	27.6%	8.9%	-1.3%	0.03%	N/A	N/A	N/A
EWH	iShares MSCI Hong Kong ETF	BlackRock	0.50%	HK$0.7B	34.9%	5.1%	0.9%	0.03%	0.19%	N/A	0.050%
Category Average			0.65%	—	N/A	N/A	N/A	0.03%	—	N/A	—

Risk Metrics

Beta

0.67

Standard Deviation

1 Year	3 Years	5 Years	10 Years
N/A	N/A	N/A	N/A

Sharpe Ratio

1Y	3Y	5Y	10Y
N/A	N/A	N/A	N/A

Sortino Ratio

3 Years	5 Years
N/A	N/A

Maximum Drawdown

1 Year	3 Years	5 Years	Since Inception
N/A	N/A	N/A	N/A

Correlations

Liquidity & Trading

Volume

Avg Daily Shares

480,884,933

Avg Daily Dollar Volume

HK$12905.1M

Trend

stable

Bid-Ask Spread

Metric	Value
Median (Percent)	0.050%
Median (Dollar)	HK$0.01
During Hours	N/A
At Close	N/A
Volatility	low

Premium/Discount to NAV

Metric	Value
Current	14.74%
30-Day Average	N/A
1-Year Average	N/A
Standard Deviation	N/A
Max Premium (1Y)	N/A
Max Discount (1Y)	N/A

Creation/Redemption Activity

Trend

decreasing

Net Flows

Period	Net Flow
1 Year	HK$-37870.0M

⚠️ Disclaimer: This ETF research report is for informational and educational purposes only. It does not constitute investment advice, a recommendation, or an offer to buy or sell securities. EC² Invest is not a registered investment advisor. All data is sourced from public sources and may contain errors. Past performance does not guarantee future results. ETF investing involves risk, including possible loss of principal. Always conduct your own research and consult with a qualified financial professional before making investment decisions.