Legal status of 2800.hk (tracker fund): can it go bankrupt?

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  1. #1

    Join Date
    Jan 2009
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    Legal status of 2800.hk (tracker fund): can it go bankrupt?

    I am sure this is a stupid question to some of you.

    2800.hk is run by State Street Global Advisors (HK) Ltd., but I can't really find much additional information about that tracker fund, apart that it was started by the government many years ago.

    My question is: When you buy into that fund, do you actually own the underlying shares? Or can the State Street Global Advisors (HK) Ltd. go bankrupt and you lose everything?

    Also, which one do you reckon is the best tracker fund for China (traded in HK)?

    Thanks a lot.


  2. #2

    Join Date
    Nov 2005
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    generally a fund is set up as a ring fenced company to take investor money and hold assets.

    the fund will raise some funds, and use the collected funds to purchase the asset. The total value of the assets are divided by the number of shares to become the NAV.

    a fund would have rules that say:

    1. can only purchase this/this/that/that equity
    2. can only have how much maximum of idling cash
    3. cannot borrow money unless its for short term redemption and up to a maximum of n%

    etc.etc.

    so in such context, if a fund is properly defined (under the prominent scheme of investment, e.g. UCIT III, or Sg CIS), they have extremely minute risk of going bankrupt. Only chance of doing that is: (1) if all assets in the fund suddenly fall to near zero, (2) the fund need to pay the manager a fixed minimum sum of money, (3) or a huge mistake by the trader in trading the fund.

    As long as the rules are properly set and the traders are doing their things properly, there shld not be any reason why the fund will go bankrupt.


    As for china trackers, I believe there is only 1 on A shares, the A50 trackor, ishareA50 ? Can't rem the exact ticker but likely to be 2823 or 2828...


  3. #3

    ETFs like the tracker fund are mandated to have a custodian that holds the assets; and the assets held by the custodian must also be segregated from the custodian's own assets

    in other words, if state street goes down the tracker fund should still be fine

    2823 is the barclays fund that tracks the A share market
    there's another one that tracks the SHSZ 300 A share index

    there're a couple that tracks the H-share index

    beware that the A share market and H-share market, even though some of the companies may be the same and in general gives you exposure to china, these two markets may perform very differently