The quarterly index rebalancing for HK Stock Connect innovative drug stocks is officially in effect as of September 14th, prompting a synchronized portfolio refresh for the Huabao Hang Seng HK Stock Connect Innovative Drug Selection ETF (520880), which allocates its entire holdings to companies at the forefront of innovative drug research and development.
Here are the key highlights from this rebalancing cycle. First, the constituent list has shifted with five additions and three removals, bringing the total count back up to 50. The newly added names include HENLIUS, Harbour BioMed, CStone Pharmaceuticals, Raynovent Biotech, and Mabwell Biosciences, all of which are dedicated to innovative drug R&D. Meanwhile, Vazyme Biotech, Boan Biotech, and TYK Medicines have been removed from the index.
This adjustment follows a temporary rebalancing in July, which saw two suspended stocks, Zhonghui Bio and Mirxes, being excluded, and the total number of constituents has now recovered to 50. Notably, this ETF's benchmark index has been quick to incorporate newly eligible HK Stock Connect targets, moving ahead of other comparable indices in adopting fresh listings.
Among the five stocks added during this cycle, four of them—HENLIUS, Harbour BioMed, CStone Pharmaceuticals, and Raynovent Biotech—were only just admitted into the Stock Connect program on September 7th, underscoring the index's proactive approach to capturing emerging opportunities.
The index remains precisely focused on innovative drug R&D companies, and its latest additions predominantly operate within cutting-edge therapeutic areas such as tumor immunology, antiviral treatments, nucleic acid-based drugs, and antibody-drug conjugates (ADCs), which align seamlessly with the current strategic priorities of the innovative drug sector.
Turning to the secondary market, the HK Stock Connect innovative drug segment has experienced continued volatility since mid-July, and on September 15th, the Huabao HK Stock Connect Innovative Drug ETF (520880) once again fell below all its key moving averages.
However, from a medium-to-long-term perspective, the industry's fundamentals remain solid, supported by robust sector momentum and sustained improvement in business performance. This might present a favorable window for investors to accumulate exposure to core assets in innovative drug development.
Statistical data reveals that over 70% of the innovative drug R&D companies covered by this ETF reported year-on-year profit growth in the first half of the year. Additionally, from January to August of this year, the total value of Chinese innovative drug out-licensing (BD) deals reached $111.5 billion, already accounting for 79.6% of the full-year figure for 2025, which further validates the continued strength of the overseas expansion trend.
Looking ahead, a dense pipeline of industry catalysts is on the horizon. The ESMO annual meeting, scheduled for October 23rd, represents another significant window for clinical data disclosures, following the WCLC conference. Furthermore, the release of the medical insurance catalog and commercial insurance catalog is expected in November, with potential upside from new innovative drug inclusions and accelerated sales volume trajectory.
For investors seeking a one-stop vehicle to leverage innovative drug opportunities, the Huabao HK Stock Connect Innovative Drug ETF (520880) serves as a real-time T+0 trading instrument, closely tracking the Hang Seng HK Stock Connect Innovative Drug Selection Index. Its portfolio is exclusively composed of innovative drug R&D companies, with the top ten heavyweight stocks representing over 70% of the total holdings, underscoring the fund's strong leadership attributes.
Data sources include Hang Seng Index Company, Shanghai-Shenzhen-HK Stock Exchanges, listed company interim reports, and Tianfeng Securities, among others. Regarding fees, the Huabao HK Stock Connect Innovative Drug ETF does not charge any sales service fees.
For the feeder fund, Class A shares carry a subscription fee of 1% for amounts below RMB 1 million, 0.6% for amounts between RMB 1 million and RMB 2 million, and RMB 1,000 per transaction for amounts exceeding RMB 2 million; the redemption fee is 1.5% for holdings under 7 days and 0% for holdings of 7 days or more, with no sales service fee. Class C shares charge no subscription fee; the redemption fee is 1.5% for holdings under 7 days and 0% for holdings of 7 days or more, while the sales service fee is set at 0.2%.
It is important to note that the fund manager has assessed the risk rating of this fund as R4, indicating a medium-to-high risk level, making it suitable for investors with a suitability rating of C4 or above. The Huabao HK Stock Connect Innovative Drug ETF and its feeder fund passively track the Hang Seng HK Stock Connect Innovative Drug Selection Index, with a base date of December 31, 2020, and a release date of July 17, 2023. The index constituents are adjusted periodically based on its compilation rules, and historical backtest performance does not guarantee future returns.
This product is issued and managed by Huabao Fund, and distribution institutions bear no responsibility for investment, redemption, or risk management. Investors should carefully review fund legal documents, including the Fund Contract, Prospectus, and Fund Product Summary, to fully understand the risk-return characteristics and select a product that aligns with their own risk tolerance. Performance of other funds under the same management does not constitute a guarantee for this fund's performance. Past performance is not indicative of future returns, and all investments in funds carry risks, requiring prudent decision-making.
Distribution institutions, including the fund manager's direct sales channels and other distributors, conduct risk evaluations of this fund in accordance with relevant laws and regulations. Investors should promptly pay attention to the suitability opinions issued by the fund manager, as these opinions may not be consistent across all distribution channels, and the risk rating results provided by sales institutions should not be lower than those assessed by the fund manager. There may be differences between the risk-return characteristics described in the Fund Contract and the fund's risk rating due to varying factors considered. Investors should understand the fund's risk and return profile, make decisions based on their own investment objectives, timeframe, experience, and risk capacity, and bear their own risks. Registration of this fund with the China Securities Regulatory Commission does not imply that the CSRC endorses or guarantees its investment value, market prospects, or returns. Investing in funds entails risks, so please invest with caution!
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