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Riding the Waves of China's EV Sector: A Deep Dive into Nikko AM Straits ETF · Investor Exchange

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  Time for another Investor Exchange podcast. Here are your hosts, Matt and Sally.
• 0:07
  Hey, everyone. Welcome back for another Deep Dive. We know you're here because
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  you want to get the inside scoop on what's really moving the needle in finance.
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  And today, we're zeroing in on a pretty interesting one.
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  We're talking about the NICO-M Straits Trading MSCI China Electric Vehicles
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  and Future Mobility ETF. Yeah, it's a mouthful. I know. It is. It is.
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  But their audited financial statement, you know, for the year ending December
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  31st, 2024, that just dropped. And we're going to break it all down.
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  Absolutely. Yeah. We've got all the important stuff right here in front of us.
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  The announcement about, well, skipping the annual general meeting and,
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  of course, the full annual report, the whole thing. The whole shebang. Exactly.
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  And, you know, we want to do more than just, you know, read off numbers and figures, right?
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  We're going to really dig into what these documents are actually telling us,
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  how the fund do, you know, what factors are driving that performance and looking
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  ahead, you know, what's the outlook? Yeah. Painting a picture for everyone, you know.
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  All right. So let's get right to it. Let's talk performance.
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  How did this NICO M straight trading MSCI, China Electric Vehicles and Future
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  Mobility ETS, specifically the SGD share class, how did it actually perform as of the end of 2024?
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  And I guess we're looking at a few different time frames here, right? We are, yeah.
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  So if we just look at the last three months of 2024, the fund saw a little bit
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  of a dip down 2.80%. But if we zoom out a bit, look at the six-month mark,
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  things are looking a lot brighter.
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  We're talking a big jump of 24.44%. Wow. Yeah.
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  And for the full year, a more modest gain of 0.82%. And then going all the way
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  back to when this fund started, January 2022, the return since inception is
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  sitting at negative 2.35%.
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  Okay, so definitely some ups and downs there. That six-month figure,
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  though, that's pretty eye-catching.
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  But, you know, we need to keep things in perspective, right?
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  We got to look at the benchmark here. That's the MSCI China All Shares IMI Future Mobility Top 50 Index.
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  How did that perform over the same timeframes? Yeah, good point.
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  So for the benchmark over those same three months, we're looking at when it
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  gets 2.47% return, but for the six months, even stronger, 25.51%. Yeah.
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  And then for the whole year, a gain of 2.29%. And since inception, negative 21.38%. Okay.
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  So when we put them side by side, it seems like the ETF and the index,
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  they're moving kind of in the same direction. For the shorter periods,
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  you know, the three months and the one year, the ETF lagged a bit behind the benchmark.
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  And the same goes for that big six-month surge.
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  The index just edged ahead. But it's interesting, since inception,
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  their overall performance is really close. What's that tight correlation telling us?
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  Yeah, well, it's a pretty strong indicator that the fund's strategy,
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  which is basically to try and mirror the index, you know, that's actually working pretty well.
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  The stated goal, their investment objective, it's all about achieving long-term
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  capital growth, you know, by basically replicating the returns of this specific
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  MSCI China All Shares IMI Future Mobility Top 50 Index.
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  And this index, you know, it zeroes in on companies that are expected to be
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  big players in the future of, well, how we get around in China.
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  We're talking about electric vehicles, energy storage, you know,
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  even things like self-driving cars and all sorts of new transportation technologies.
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  Yeah, the future of mobility, you know, the whole package. Exactly. So.
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  How does the fund actually go about replicating this index?
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  You know, it's not just about buying every single stock in the exact same proportion,
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  right? It's got to be a bit more complicated than that.
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  Yeah, it can be. The main approach they use is what they call full replication.
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  That means they try to hold pretty much all the same stocks that are in the
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  index, you know, in roughly the same proportions.
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  But the report also mentions, you know, they have the option to use something
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  called representative sampling.
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  So think about, you know, choosing a smaller basket of stocks that when you
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  put them all together, they act very similar to the whole index.
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  You know, they mimic the overall performance and characteristics.
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  And they might also invest in similar types of securities that aren't technically
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  part of the index itself.
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  Okay. So kind of like taking a shortcut, but still aiming for the same destination in a way.
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  Yeah, that's a good way to put it. And that probably makes things a lot easier,
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  especially when you consider, you know, how to actually access some of those
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  Chinese markets. The report mentions the Shanghai and Shenzhen Stock Connect
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  programs and also maybe using something called the QFI framework.
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  Now, for folks listening, these are basically like, you know,
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  special pathways that let international investors get into mainland China's stock markets.
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  Yeah, it's like having different routes you can take to reach the same place. Exactly, exactly.
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  And in terms of costs, you know, it's pretty clear there are no upfront fees,
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  no subscription fees or those preliminary charges for this ETF.
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  So that's a that's a nice little savings for investors right away.
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  Yes, right off the bat. All right. So now let's let's dig a little deeper.
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  You know, let's talk about why we're seeing these specific performance numbers.
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  I know the report doesn't give us a, you know, a blow by blow account of every
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  single thing that happened in the market. But just thinking about the types
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  of companies in the index, that gives us some clues, right?
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  We're talking about electric vehicles and future mobility in China.
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  That's a sector that's been...
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  Pretty dynamic, to say the least. Oh, yeah, absolutely. It's been a wild ride.
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  And you're right. Just looking at the index itself gives us some hints.
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  That huge 24% jump over six months, that probably tells us that investors were
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  feeling pretty bullish about Chinese EV and the whole future mobility scene during that time.
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  There could be a bunch of reasons for that. Maybe some positive policy announcements
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  from the government in Beijing.
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  Maybe some big tech breakthroughs from Chinese companies. or maybe just a general
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  increase in, you know, global investors looking for growth stocks,
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  especially ones tied to, you know, green tech and things like that.
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  Yeah, it's all connected. It is, yeah.
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  And on the flip side, you know, that little dip we saw in the last three months
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  of 2024, that could be a sign of things cooling down a bit,
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  maybe some profit taking, or maybe just some renewed worries about the overall
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  economy or some specific regulations within China, you know.
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  Right. Those headwinds can pop up.
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  I can. And the fact that the ETS performance is sticking so close to the benchmark,
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  that suggests it's capturing those bigger trends happening in that specific
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  part of the Chinese market, right?
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  Exactly. So when investors are feeling good about Chinese EV and future mobility.
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  The ETF tends to go up. And when there's doubt, well, the ETF reflects that, too.
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  It's like a sensitive instrument picking up all the vibes from the market.
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  I like that analogy. Yeah. It's like a seismograph for investor sentiment.
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  Yeah, there you go. And any little differences in performance,
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  I guess those could be because of, you know, little details about how often
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  the fund actually adjusts its holdings to stay in sync with the index,
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  or maybe some small trading costs associated with those dot connect things we talked about.
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  Right, exactly. But overall, the correlation is very strong.
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  You know, it shows that the replication strategy is doing what it's supposed to be doing.
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  OK, so let's let's look ahead now. This announcement about not holding future
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  annual general meetings. That's interesting.
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  Instead, they're going to rely on just releasing the audited financial statements.
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  What do you think is going on there? Well, this move away from AGMs,
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  it probably means they're focusing on efficiency and, you know,
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  making sure investors get information directly by putting those audited reports
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  out there for everyone to see.
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  They're giving investors the key data without the need for a big formal meeting. Right.
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  Cutting to the chase. Yeah, it can save time and money. But,
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  you know, for everyone listening, it's worth thinking about this.
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  While it's efficient, it might also mean less opportunity to,
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  you know, actually interact with the fund managers and ask them questions directly,
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  you know, in a public setting. Yeah, that back and forth can be valuable.
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  It can be. And there's also a big change coming up.
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  A change in the fund's name and manager starting September 1st, 2025.
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  NICO AM Asia Limited VCC is going to become AMOVA Asia Limited VCC.
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  And NICO Asset Management Asia Limited will be replaced by AMOVA Asset Management Asia Limited.
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  Right, a whole new look. Yeah, a pretty big shift.
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  Now, these reports don't really spell out the reasons, but a change in management,
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  a new name, that usually means some kind of strategic change is happening with
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  the fund, right? Yeah, absolutely.
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  It could be part of a bigger reorganization, maybe a shift in their focus,
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  or maybe just a new team coming in to take charge.
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  Definitely something to watch as we get closer to September 2025. For sure.
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  Now, despite all these changes, the main objective of the fund,
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  that's staying the same.
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  Long-term capital growth, tracking that MSCI, China All Shares,
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  IMI, Future Mobility Top 50 Index.
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  So even with a new name and manager, the core goal is still tied to the potential
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  of this, you know, future mobility sector in China, it seems like they're still
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  betting on long-term growth in that area, even though we've seen those ups and
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  downs in the performance figures, you know, in the short term.
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  Yeah, that's the key takeaway. They're looking at the long game.
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  You know, got to remind everyone listening, the standard disclaimer,
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  past performance is never a guarantee of future results.
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  Investments go up and down and you could end up with less than you put in.
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  Always got to keep that in mind. And it's also important to understand that
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  the price of the ETF units, you know, how they trade on the Singapore exchange,
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  that might not always match up perfectly with the underlying net asset value per share.
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  The forces of supply and demand can create little differences here and there.
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  Yep, that's the market doing its thing. Exactly.
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  This isn't likely to happen, especially for a well-established ETF.
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  But the annual report does mention the possibility of the ETF being suspended
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  or delisted from the exchange.
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  Standard cautionary stuff, just highlighting the inherent risks that come with
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  any listed investment. Right.
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  Got to cover all the bases. And for anyone thinking about investing.
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  You know, keep in mind that creating or redeeming shares in this ETF directly
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  with the fund, that usually happens in big chunks, big blocks of shares.
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  And it's usually done by those authorized participating dealers.
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  Regular investors, they buy and sell their units on the exchange.
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  Yeah, that's the typical route.
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  Okay. And last but not least, and this is crucial, everything we've talked about
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  today, it's for information only. It's not financial advice.
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  If you're thinking about investing, you got to talk to a qualified financial advisor.
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  They can give you personalized guidance based on your own situation and your own goals.
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  Couldn't have said it better myself. Right. So let's do a quick recap of our deep dive.
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  We looked at the performance of the Nico Amstreet trading MSCI China Electric
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  Vehicles and Future Mobility ETF for 2024.
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  Saw a little dip lately, but a big six-month recovery, a modest gain for the
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  year, and overall a negative return since it started, all of it pretty much
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  matching its benchmark.
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  And we also talked about those upcoming changes to the fund's name and management
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  coming in September 2025. Right. Big changes on the horizon. Big changes.
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  And we emphasize that the fund's main goal, that's still all about capturing
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  those long-term growth opportunities in the Chinese future mobility sector,
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  even with the ups and downs the market throws at us in the short term.
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  Absolutely. The long view is key. And that brings us to our final thought for everyone listening.
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  Thinking about those performance patterns we've seen and the fact that the electric
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  vehicle and future mobility industries in China, they're constantly evolving.
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  What specific long-term economic and technological shifts do you think are going
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  to have the biggest impact on how funds like this one perform in the years to come?
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  You know, think about things like government incentives, battery tech,
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  how quickly self-driving cars are adopted, all that stuff. Lots to think about.
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  Yeah, definitely. And if you want to dig even deeper, you know,
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  get all the nitty gritty details, the full annual report and prospectus.
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  Those are all available on the NICO AM website, www.nicoham.com.sg.
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  All the info you could ever need. Yeah. Thanks for joining us on this.
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  Music.