"..... to provide investment results that closely correspond to the performance of the Hang Seng Index ("Index").
The Manager seeks to achieve this investment objective by directly investing all, or substantially all, of the TraHK's assets in shares in the constituent companies of Hang Seng Index in substantially the same weightings as they appear in the Index."
And that is indeed what is happening, providing results very close to the HSI.
The largest holdings of its current portfolio:
The yearly charges are very low, as detailed by David Webb:
" ..... the Tracker Fund remains the most efficient way for those who cannot pick stocks to own a piece of the HK market, costing around 0.1% p.a. compared with almost 2% on your MPF funds."
I think that the Tracker Fund (and thus the HSI) is undervalued at the moment.
One clue can be found in the share price:
In the "goldilocks" years (before the Global recession of 2008/09) the share price probably overshot it's fair value, while during the recession it went too low. May be a valuation of about HKD 20 was fair for those years.
But the current price is still in that same region, meaning that the share price has not appreciated over about eight (!) years.
Another clue can be found in the dividends (which the company pays twice a year):
The last column shows the yield at the current share price, it has been steadily rising, and one can expect a total dividend of around HKD 0.80 this year, for a yield of close to four percent. That is rather rich, I think it will come down eventually, not because the total dividend amount will come down (it will most likely continue to rise steadily), but because the share price will go up.
In other words: while waiting for the share price to rise, one can enjoy the rather rich dividend yield of about 4%.
However, as always, there are risks involved:
- The results of Hong Kong companies are tied to the economy of China, which at the moment is not doing well; I assume that is temporarily, and in a few years all is going full steam ahead, but that is an assumption
- Globally things are rather "shaky" (think: Brexit), which could give downward pressure to the share price in the near future
- There are quite a few banks in the portfolio, personally I am not too enthusiastic about that, I had rather seen more non-financial companies
- The Hong Kong Dollar is tied to the US Dollar, which has performed very well in the past; that could change in the future, even the peg could eventually be discontinued which could have a negative effect on the share price (at least in the short term)
Disclaimer: this is not a recommendation. Please do your own homework, and make your own investment decisions or ask advice from a professional advisor. I do own (at this moment) shares in the Tracker Fund.