What are the risks of ETF investing in Hong Kong stocks?
1 risk of fund net value fluctuation
Since the target of Hong Kong stock ETF is to copy the target index, when the target index fluctuates due to various factors, the net value of Hong Kong stock ETF will also fluctuate. This is the biggest risk of investing in Hong Kong stock ETFs.
2. Risk of tracking error of fund net value and underlying index
Due to the influence of management fees, dividends of constituent stocks and other factors, it is difficult for ETF managers to completely copy the index performance, resulting in tracking errors.
3 transaction discount premium risk
Due to the arbitrage mechanism of discount premium in Hong Kong stock ETF, the transaction price tends to be consistent with the net value under normal circumstances, but due to the influence of market supply and demand, its discount premium may also fluctuate greatly in the short term.
4 Exchange rate fluctuation risk
Hong Kong ETFs are denominated in RMB, and the assets they hold are Hong Kong stocks denominated in Hong Kong dollars. The fluctuation of RMB exchange rate against Hong Kong dollar may cause the fluctuation of fund net value.
In short, investors should carefully read the fund contract, prospectus and related announcements before investing in Hong Kong stock ETFs, fully understand the operating mechanism, risk-return characteristics and potential risks of the products, fully consider their own risk tolerance and cognitive ability, rationally judge the market and make investment decisions cautiously.