Martin Lee @ Sg
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Lyxor ETF MSCI AC Asia ex Japan Real Estate

The Lyxor ETF MSCI AC Asia ex Japan Real Estate (US$) was launched by Lyxor recently.

This ETF tracks the MSCI AC Asia ex Japan Real Estate index (Bloomberg ticker: MXASJRE), which includes real estate investment companies and real estate management and development companies in China, Hong Kong, India, Malaysia, Philippines, Singapore and Taiwan.

The Manager currently uses a Synthetic Replication strategy whereby basically the Fund will invest in a universe of stocks selected by the Manager that may be different from the universe of stocks constituting the Index which the Fund is seeking to track.

In order to replicate the Benchmark Index, the Manager will also enter into the Swaps (with Société Générale as the swap counterparty), where the Fund will exchange its exposure to the stocks bought by the Fund with the exposure to the Benchmark Index. With this technique the Fund will optimise its replication of the Benchmark Index and minimise the cost of replication to achieve its main objective which is to track the Benchmark Index.

However, if the Manager believes that the current Synthetic Replication strategy is not the most efficient means to track the Benchmark Index, the Manager may decide to adopt a direct replication indexing strategy (whereby the Fund invests in substantially all of thesecurities comprising the Index in approximately the same proportions as in the Index) or any other strategy in its absolute discretion and as often as it believes appropriate in order to achieve the investment objective of the Fund.

There is an maximum exposure limit of 10% of the Fund’s assets to financial derivative instruments negotiated over-the-counter.

The ETF charges an annual management fee of 0.65%.

Allocation to the different regions is about:

  • Hong Kong (60%)
  • China (19%)
  • Singapore (13%)
  • India (4%)
  • Philippines (2%)
  • Taiwan and Malaysia (<1% each)

Through the index, you will get exposure to (based on Oct 2010 factsheet):

  • Sun Hung Kai Properties 12.90%
  • China 18.80% Cheung Kong Holdings Ltd 11.13%
  • Singapore 13.40% Swire Pacific Ltd ‘A’ 5.61%
  • India 4.40% Hang Lung Properties Ltd 5.37%
  • Philippines 1.70% Wharf Holdings Ltd 4.68%
  • Taiwan 0.70% China Overseas Land & Invest 4.57%
  • Malaysia 0.50% Capitaland Ltd 4.18%
  • Henderson Land Development 4.08%
  • Link Reit 3.45%
  • City Developments Ltd 2.80%
  • Hang Lung Group Ltd 2.77%
  • New World Development 2.71%
  • China Resources Land Ltd 2.17%
  • Kerry Properties Ltd 2.06%
  • Capitamall Trust 1.93%
  • Sino Land Co 1.88%
  • Dlf Ltd 1.83%
  • Wheelock & Co Ltd 1.62%
  • Shimao Property Holdings Ltd 1.40%
  • Ascendas Real Estate Inv Trt 1.32%

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