Hong Kong's Exchange Fund, which manages over HK$4.3 trillion in assets and is considered the city's fiscal backbone, is reportedly planning a new investment initiative.
According to sources, the Hong Kong Monetary Authority (HKMA) has recently and discreetly approached several global asset management firms with a plan to entrust them with a new pool of capital, with the objective of closely tracking the performance of the S&P 500 index.
The sources indicated that the HKMA has evaluated multiple proposals over the past few months. While a final decision has not been made, the authority has explicitly required a "low tracking error" strategy, meaning the fund manager's operations must closely follow the index's movements to minimize deviation.
This performance metric has also been incorporated into the manager evaluation mechanism.
It is noteworthy that the Exchange Fund typically does not disclose the specific holdings within its U.S. stock or bond portfolios. The amount of capital involved in this new S&P 500-focused allocation is currently unknown.
The report added that the Exchange Fund's existing U.S. equity investments already include active fundamental stock-picking strategies. Due to commercial sensitivity, the fund has a long-standing practice of not disclosing detailed holdings.
Responding to inquiries, an HKMA spokesperson emphasized that the authority does not comment on details of specific investment activities, but confirmed that it periodically appoints various external asset management companies to assist in managing different asset classes.
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