U.S. 50 ETF has a substantial premium, and E Fund reminds investors to pay attention to risks and invest rationally
Recently, the secondary market transaction price of E Fund MSCI US 50 ETF has experienced a substantial premium, reaching as high as 42.46% as of the closing on the morning of January 26. In response to this, E Fund has continuously issued premium risk warnings, reminding investors to pay attention to the premium risk of secondary market transaction prices. As a precautionary measure, trading of the ETF was suspended from the opening of the market on the afternoon of January 26 until the close of the day.
In an effort to address the high premiums in secondary market transactions, E Fund has raised the cumulative single-day subscription limit for the U.S. 50 ETF to 50 million units. Furthermore, the fund announced that it will take measures to protect the interests of fund shareholders, including increasing the number of trading suspensions and extending the suspension time based on the premium rate.
A substantial premium for an ETF indicates that its secondary market transaction price is significantly higher than the fund share reference net value (IOPV). This poses a potential risk for investors, as the cost paid for an ETF at a high premium may deviate significantly from the net value of the fund shares. Lin Weibin, general manager of E Fund Index Investment Department and fund manager of E Fund MSCI US 50 ETF, emphasized the importance of paying special attention to the premium risk of secondary market transaction prices and making investment decisions rationally in light of the increased trading activity and significant premium risk.
It is crucial for investors to be aware of the potential risks associated with purchasing an ETF at a high premium, as the transaction price may eventually return to the net value of the fund in the future, leading to potential losses if investment decisions are made blindly.
E Fund’s proactive approach to addressing the high premiums in secondary market transactions highlights their commitment to protecting the interests of fund shareholders and ensuring that investors are well-informed about the potential risks involved in trading the U.S. 50 ETF.
The original title of this article is “U.S. 50 ETF has a substantial premium, and E Fund reminds investors to pay attention to risks and invest rationally.” The content and information provided do not constitute investment advice and readers are urged to operate accordingly at their own risk.
(Source of article: Daily Economic News)