Fubon FTSE Taiwan Daily (-1x) Inverse Product
Important Information
Important Information
Investment involves risks. Investment value may rise or fall. Past performance information presented is not indicative of future performance. Investors should refer to the Explanatory Memorandum and the Product Key Facts Statement for further details, including product features and risk factors. Investors should not base on this material alone to make investment decisions.
- Fubon FTSE Taiwan Daily (2x) Leveraged Product and Fubon FTSE Taiwan Daily (-1x) Inverse Product (hereafter each referred to as “Product” and collectively as “Products”) are sub-funds of Fubon Leveraged & Inverse Series, an umbrella unit trust established under Hong Kong law. Units of the Products (the “Units”) are traded in HKD on The Stock Exchange of Hong Kong Limited (the “SEHK”) like stocks. The Products use a futures-based investment strategy, which invests directly in spot month SGX FTSE Taiwan Index Futures traded on the Singapore Exchange (“SGX”), so as to give the Products twice (2x) / one time inverse (-1x) of the Daily performance of the FTSE Taiwan RIC Capped Index (the “Underlying Index”) respectively. The Products are denominated in HKD. Creations and redemptions are in HKD only. The Products only target sophisticated trading-oriented investors who understand the potential consequences of seeking daily leveraged/inverse results and the associated risk and constantly monitor the performance of their holdings on a daily basis.
- The Products are derivative products and are not suitable for all investors. There is no guarantee of the repayment of principal. Therefore your investment in the Products may suffer substantial or total losses.
- The Products are not intended for holding longer than one day as the performance of the Product over a period longer than one day will very likely differ in amount and possibly direction from the leveraged/inverse performance of the Underlying Index over that same period. The effect of compounding becomes more pronounced on the Product’s performance as the Underlying Index experiences volatility.
- The Product does not seek to achieve its stated investment objective over a period of time greater than one day.
- Investing in the leveraged product is subject to the general market risk of equity investment, its value will be fluctuated because of multiple factors. Investing in the inverse products is different from taking a short position. Because of rebalancing, the return profile of the inverse products is not the same as that of a short position. Risk investment outcome of the Inverse Product is the opposite of conventional investment funds. If the value of the Underlying Index increases for extended periods, the Inverse Product will likely lose most or all of its value.
- As a result of daily rebalancing, the Underlying Index’s volatility and the effects of compounding of each day’s return over time, it is even possible that the Products will lose money over time while the Underlying Index’s performance falls/decreases or is flat.
- The Underlying Index is a new Index. The Products may be riskier than other exchange traded funds tracking more established indices with longer operating history.
- The Product’s investments are concentrated in a specific geographical location (i.e. Taiwan). The value of the Product may be more volatile than that of a fund having a more diverse portfolio of investments. The value of the Product may be more susceptible to adverse economic, political, policy, foreign exchange, liquidity, tax, legal or regulatory event affecting the Taiwan market.
- The Underlying Index constituents are companies listed on the Taiwan Stock Exchange which is an emerging market. Investments of the Product may involve increased risks and special considerations not typically associated with an investment in more developed markets, such as liquidity risks, currency risks/control, political and economic uncertainties, legal and taxation risks, settlement risks, custody risk and the likelihood of a high degree of volatility.
- The trading price of the Units on the SEHK is driven by market factors such as the demand and supply of the Units. Units may trade at a substantial premium or discount to the NAV.
- Prices of the Products may be more volatile than conventional ETFs because of the use of leverage and the daily rebalancing activities and the leverage effect.
- The Products involve investment risk, leverage and inverse performance risk, long term holding risk, inverse product vs. short selling risk, unconventional return pattern risk, risk related to rebalancing activities, liquidity risk, intraday investment risk, portfolio turnover risk, futures contracts risks, trading time differences risk, difference in price limit risk, volatility risk, Taiwan market risks, concertation risk, currency risk, passive investments risks, trading risks, tracking error and correlation risks, termination risk, reliance on market maker risks.
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This product is designed to be used for short term trading or hedging purposes, and it is not intended for long term investment.
Investment Objective
The investment objective of the Product is to provide investment results that, before fees and expenses, closely correspond to the inverse (-1x) Daily performance of the FTSE Taiwan RIC Capped Index (the “Underlying Index”). The Product does not seek to achieve its stated objective over a period of time greater than one day.“Daily” in relation to the inverse performance of the Underlying Index or performance of the Product, means the inverse performance of the Underlying Index or performance of the Product (as the case may be) from the close of the relevant market of a given Business Day until the close of the relevant market on the subsequent Business Day.
- Market information
- Appropriation
- Underlying Index Information
- Trading Information
- Participating Dealers
- Market Makers
Market Information
| Last | Date | Change | Change (%) | |
|---|---|---|---|---|
| NAV per Unit in USD (official) | 0.6817 | 26/04/2024 | -0.0099 | -1.4315 |
| NAV per Unit in HKD (for reference only) | 5.3400 | 26/04/2024 | -0.0800 | -1.4760 |
| Closing Price for Trading unit in HKD | 5.3350 | 26/04/2024 | -0.1150 | -2.1101 |
Appropriation
|
Leverage |
Daily opposite return (-1x) of the underlying index |
|
Actively Managed |
No |
|
Swap Based |
No |
|
Futures Based |
Yes |
|
Securities Lending |
No |
Underlying Index Information
|
Underlying Index |
FTSE Taiwan RIC Capped Index |
|
Index Provider |
FTSE International Limited |
|
Base Currency of Index |
USD |
|
Inception Date |
29 September 2017 |
|
Type of Underlying Index |
A price return index which calculates the performance of the Underlying Index constituents without adjustments for cash dividends or warrant bonuses |
|
Bloomberg Ticker |
FTCRTWRP |
Trading Information
|
Exchange Listing |
SEHK – Main Board |
|
Listing Date |
28 May 2021 |
|
Stock Code |
7332 |
|
Stock Short Name |
FIFBFTTAIWAN |
|
Trading Board Lot Size |
100 Units |
|
Trading Currency |
Hong Kong dollar (HKD) |
|
SEDOL Code |
BNVVFJ6
|
|
ISIN Code |
HK0000742574 |
|
Bloomberg Ticker |
7332 HK |
Participating Dealers
Mirae Asset Securities (HK) Limited
Citigroup Global Markets Asia Limited
Haitong International Securities Company Limited
Market Makers
Investor education
Inverse Products typically aim to deliver the opposite of the daily return of the underlying index. For example, if the underlying index rises by 10 per cent on a given day, the Inverse Product should incur a 10 per cent loss on that day.
2. What is daily rebalancing?
The Product as an inverse product will rebalance its position on a Business Day. On each Business Day the Product will seek to rebalance its position at or around the close of trading of the Index Futures Contracts, by decreasing exposure in response to the Underlying Index’s Daily gains or increasing exposure in response to the Underlying Index’s Daily losses, so that its Daily inverse exposure ratio to the Underlying Index is consistent with the Product’s investment objective.
3. Describe daily rebalancing of the Inverse Product
The table below illustrates how the Product as an inverse product will rebalance its position following the movement of the Underlying Index by the end of the day.* Assuming that the initial Net Asset Value of the Product is 100 on day 0, the Product will need to have a futures exposure of -100 to meet the objective of the Product. If the Underlying Index decreases by 10% during the day, the Net Asset Value of the Product would have increased to 110, making the futures exposure of the Product -90. As the Product needs a futures exposure of -110, which is -1x the Product’s Net Asset Value at closing, the Product will need to rebalance its position by an additional -20. Day 1 illustrates the rebalancing requirements if the Underlying Index increases by 5% on the subsequent day.
* The above figures are calculated before fees and expenses.
4. Describe "Path Dependency" of the Inverse Product
As explained above, the Product aims to track the inverse performance of the Underlying Index on a Daily basis. However, due to path dependency of the Underlying Index and the Daily inverse performance of the Underlying Index, when comparing the Underlying Index and the inverse performance of the Underlying Index for a period longer than one day (i.e. comparison of the point-to-point performance), the historical inverse performance of the Underlying Index will not be equal to the simple inverse performance of the Underlying Index over the same period of time.
Below is an example which illustrates the “path dependency” of the Underlying Index and the inverse performance of the Underlying Index. Please note that figures used are for illustration purposes only and are not indicative of the actual return likely to be achieved.
Assuming the Product tracks the inverse performance of the Underlying Index perfectly on a Daily basis, the absolute percentage change in the Daily movement of both the Product and the Underlying Index will be the same. That is, the Net Asset Value of the Product will fall by 10.00% if the Underlying Index rises by 10.00%, and the Net Asset Value of the Product will rise by 9.09% if the Underlying Index falls by 9.09%. On the basis of such Daily movements, the respective closing levels of the Underlying Index and closing Net Asset Values of the Product are as set out in the example above.
On day 3, the closing
level of the Underlying Index is 100 which is the same as its closing level on
day 1 but the closing Net Asset Value of the Product is 98.18 which is lower
than its closing Net Asset Value on day 1. Hence, when comparing the
performance of the Underlying Index and the performance of the Product from day
1 to day 3, it is clear that the performance of the Product is not a simple
inverse performance of the Underlying Index.
5. Comparison between the Underlying index and the inverse
performance of the Underlying index for a period longer than a day (i.e.
Comparison of the point-to-point performance)
The
Product’s objective is to provide return which is of a predetermined inverse
factor (-1x) of the Daily performance of the Underlying Index. As such, the
Product’s performance may not track -1x the cumulative Underlying Index return
over a period greater than 1 Business Day. This means that the return of the
Underlying Index over a period of time greater than a single day multiplied by
-100% generally will not equal the Product’s performance over that same period.
The Product may underperform the return of -100% of the Underlying Index in a
trendless or flat market. This is caused by compounding, which is the
cumulative effect of previous earnings generating earning or losses in addition
to the principal amount, and will be amplified by the volatility of the market
and the holding period of the Product. The following scenarios illustrate how
the Product’s performance may deviate from that of -1x the cumulative
Underlying Index return over a longer period of time in various market
conditions. All the scenarios are based on a hypothetical USD100 investment in
the Product.
Scenario I: Continuous upward trend
* Figures in the above table are rounded to two decimal places.
The chart below further illustrates the difference between (i) the Product’s performance; (ii) -1x the cumulative Underlying Index return and (iii) the cumulative Underlying Index return in a continuous upward market trend over a period greater than 1 Business Day.
Scenario II: Continuous downward trend
In a continuous downward trend, where the Underlying Index falls steadily for more than 1 Business Day, the Product’s accumulated gains will be greater than -1x the cumulative Underlying Index loss. As illustrated in the scenario below, where an investor has invested in the Product on day 0 and the Underlying Index falls by 10% daily for 4 Business Days, by day 4 the Product would have an accumulated gain of 46.41%, compared with a 34.39% gain which is -1x the cumulative Underlying Index return.
* Figures in the above table are rounded to two decimal places.
The chart below further illustrates the difference between (i) the Product’s performance: (ii) -1x the cumulative Underlying Index return and (iii) the cumulative Underlying Index return in a continuous downward market trend over a period greater than 1 Business Day.
Scenario III: Volatile upward trend
In a volatile upward trend, where the Underlying Index generally moves upward over a period longer than 1 Business Day but with intraday volatility, the Product’s performance may be adversely affected in that the Product’s performance may fall short of -1x the cumulative Underlying Index return. As illustrated in the scenario below, where the Underlying Index grows by 8.85% over 5 Business Days but with intraday volatility, the Product would have an accumulated loss of 11.02%, compared with a 8.85% loss which is -1x the cumulative Underlying Index return.
* Figures in the above table are rounded to two decimal places.
The chart below further illustrates the difference between (i) the Product’s performance; (ii) -1x the cumulative Underlying Index return and (iii) the cumulative Underlying Index return in a volatile upward market trend over a period greater than 1 Business Day.
Scenario IV: Volatile downward trend
In a volatile downward trend, where the Underlying Index generally moves downward over a period longer than 1 Business Day but with intraday volatility, the Product’s performance may be adversely affected in that the Product’s performance may fall short of -1x the cumulative Underlying Index return. As illustrated in the scenario below, where the Underlying Index falls by 11.02% over 5 Business Days but with intraday volatility, the Product would have an accumulated gain of 8.85%, compared with a 11.02% gain which is -1x the cumulative Underlying Index return.
* Figures in the above table are rounded to two decimal places.
The chart below further illustrates the difference between (i) the Product’s performance; (ii) -1x the cumulative Underlying Index return and (iii) the cumulative Underlying Index return in a volatile downward market trend over a period greater than 1 Business Day.
In a volatile market with flat index performance, the aforementioned compounding can have an adverse effect on the performance of the Product. As illustrated below, even if the Underlying Index has returned to its previous level, the Product may lose value.
* Figures in the above table are rounded to two decimal places.
The chart below further illustrates the difference between (i) the Product’s performance; (ii) -1x the cumulative Underlying Index return and (iii) the cumulative Underlying Index return in a volatile market with flat index performance over a period greater than 1 Business Day.
Investors should note that due to the effect of “path dependency” (as explained below) and compounding of the Daily returns of the Underlying Index, the inverse performance of the Underlying Index (and as a result the performance of the Product before deduction of fees and expenses) for periods longer than a single day, especially in periods of market volatility which has a negative impact on the cumulative return of the Product, may be completely uncorrelated to the extent of change of the Underlying Index over the same period.
For further illustration of the Product’s performance under different market conditions, investors may access the “performance simulator” on the Product’s website at www.fubonetf.com.hk (which has not been reviewed by the Commission), which will show the Product’s historical performance data during a selected time period since the launch of the Product.
6. Futures-based replication strategy
Futures-based ETFs are passively-managed index funds traded on an exchange which aim to replicate the performance of an underlying index by investing in futures contracts.
A futures-based ETF may track a spot market index or a futures index. Typically, a futures index tracked by a futures-based ETF is either an excess return index or a total return index.
• An excess return index measures the changes in the prices of the underlying futures contracts during the period that they are held by the ETF as adjusted by, the gain or loss incurred from rolling the futures contracts as they approach maturity.
• A total return index measures the changes in prices of the futures contracts and the gain or loss incurred from rolling the futures contracts, as well as the notional interest earnings from the ETF's cash holding and margin deposits based on various assumptions.
As one of the different types of ETFs, futures-based ETFs have the key benefits of a typical ETF, such as easy to trade, diversified, transparent and cost-effective.
At the same time, it also benefits from the use of futures contracts in gaining exposure to a wide range of underlying assets including commodities (such as precious metals and other physical commodities), fixed income securities and equities.
However, investing in futures-based ETFs is subject to common risks of ETFs as well as relevant risks involved in futures funds.
Announcements
Market Price IFRAME
Tracking Error
Daily TD is the difference between the daily return of an Inverse Product and the daily opposite return of the underlying index.
Tracking Error (TE):
Tracking error measures how consistently an Inverse Product delivers the opposite return of the underlying index. It is the volatility (measured by standard deviation) of that daily difference.
Product's performance is calculated on an NAV-to-NAV basis without any reinvestment of distributions.
|
Tracking Difference |
Tracking Error |
|
As of 31/3/2024 Product listing date: 28/5/2021 Rolling 1-year actual average daily TD: -0.0050% |
As of 31/3/2024 Product listing date: 28/5/2021
Rolling 1-year Daily TE^:0.2525%
^TE is measured by the standard deviation of the daily TD.
The standard deviation is calculated based on the daily TD over the rolling one year period.
|
Product's performance is calculated on an NAV-to-NAV basis without any reinvestment of distributions.
1. Intra-day Market Price refers to the market price of Fubon FTSE Taiwan Daily (-1X) Inverse Product on the date and at the time specified above, quoted from the Stock Exchange of Hong Kong Limited (the “SEHK”).
2. Change of the Closing NAV per Unit indicates the change of the Closing NAV per Unit since previous Dealing Day. Please refer to the Prospectus for more information on the determination of NAV and the definition of Dealing Day.
3. Changes of the Closing price indicates the change of the closing price since previous SEHK trading day. Source of Closing Price: Bloomberg.
4. Underlying Index returns are for illustrative purposes only and are not indicative of future results. Underlying Index returns do not reflect any management fees, transaction costs or expenses. Change indicates the change since the last closing index level. Source: FTSE, Bloomberg.
Source: Fund performance and index data are provided by Fubon Fund Management and the relevant index providers (if applicable) respectively.
Index Provider Disclaimer
The Product has been developed solely by Fubon Fund Management (Hong Kong) Limited (the “Licensee”). The Product is not in any way connected to or sponsored, endorsed, sold or promoted by the London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group”). FTSE Russell is a trading name of certain of the LSE Group companies.
All rights in the Underlying Index vest in the relevant LSE Group company which owns the Underlying Index. “FTSE®” is a trade mark(s) of the relevant LSE Group company and is/are used by any other LSE Group company under license.
The Underlying Index is calculated by or on behalf of FTSE International Limited or its affiliate, agent or partner. The LSE Group does not accept any liability whatsoever to any person arising out of (a) the use of, reliance on or any error in the Underlying Index or (b) investment in or operation of the Product. The LSE Group makes no claim, prediction, warranty or representation either as to the results to be obtained from the Product or the suitability of the Underlying Index for the purpose to which it is being put by the Licensee.
The investment product(s) mentioned in this material is/are authorized by the Securities and Futures Commission ("SFC") in Hong Kong. Such authorization does not imply any official recommendation by the SFC. This material and the information contained in this material shall not be regarded as an offer or solicitation of business in any jurisdiction to any person to whom it is unlawful to offer or solicit business in such jurisdictions. This material is not intended for distribution in any jurisdiction outside of Hong Kong and it is only intended for the user who received this document from Fubon Fund Management (Hong Kong) Limited (“Fubon Fund Management”). This material should not be considered as an offer or solicitation to deal in any investment products. If you wish to receive advice on investment, please consult your professional legal, tax and financial advisers.
Fubon Fund Management which prepared this material believes that information in this material is based upon sources that are believed to be accurate, complete, and reliable. However, Fubon Fund Management does not warrant the accuracy and completeness of the information, and shall not be liable to the recipient or controlling shareholders of the recipient resulting from its use. Fubon Fund Management is under no legal obligation to keep the information up-to-date. This material should not be reproduced or made available to others without the written consent of Fubon Fund Management. Please refer to the offering documents for the index provider disclaimer.
This material is prepared by Fubon Fund Management and has not been reviewed by the SFC in Hong Kong.
Issuer: Fubon Fund Management (Hong Kong) Limited