Finance Association, June 17 (Reporter Li Di) Since this year, Nvidia's popularity has remained high, with an increase of more than 160%. The two funds were also fueled, attracting quite a bit of speculative capital. Recently, these two have also issued premium risk warning announcements several times. Among them, Invesco Great Wall NASDAQ Technology ETF (QDII) issued 20 premium risk warning announcements within a month.

Many retail investors have also joined the hype boom. In addition to directly trading in the secondary market, some retail investors will also participate in short-term hype through “tractor account subscriptions” and “escrow arbitrage transfers.” In response, industry insiders advised investors to invest carefully and pay attention to the various risks they may face during the hype process.

Furthermore, for investors preparing to invest in the US stock technology sector for a long time, industry insiders also warned that they should pay attention to risks such as fluctuations in US stocks and differences in the fundamental performance of individual stocks.

The two funds frequently issue premium risk warning announcements

On June 17, Invesco Great Wall Fund issued the “Notice on Invesco Great Wall NASDAQ Technology Market Capitalization Weighted Open Index Securities Investment Fund (QDII) Secondary Market Trading Price Premium Risk Reminder and Suspension of Trading”.

According to the announcement, recently, the transaction price of the Invesco Great Wall NASDAQ Technology ETF (QDII) in the secondary market was significantly higher than the reference net value of the fund share, showing a large premium. In addition, the announcement also revealed that the fund was suspended from the opening of the market on June 17, 2024 until 10:30 on the same day.

The company also specifically reminds investors to pay attention to the risk of price premiums in the secondary market. Investors may suffer significant losses if they invest blindly.

In addition, on the same day, eFangda Fund also issued a premium risk warning notice for the eFangda S&P Information Technology Index Securities Investment Fund (LOF).

The announcement mentioned: Recently, the transaction price of E-Fangda's S&P Information Technology Index (QDII-LOF) Class A RMB share (market abbreviation: S&P Information Technology LOF) is significantly higher than the net value of the fund share. On June 12, 2024, the net share value of the fund was 4.6065 yuan, while as of June 14, 2024, the closing price of the fund in the secondary market was 5.168 yuan.

The fund manager advised investors to pay attention to the risk of price premiums in the secondary market. Investors may face large losses if they buy at high premiums.

Recently, due to the high level of speculation in the secondary market, the above two funds frequently issued premium risk warning announcements.

Including the above announcements, during the one-month period from May 18 to June 17, Invesco Great Wall NASDAQ Technology ETF (QDII) issued a total of 20 premium risk warning announcements, and the eFD S&P Information Technology Index (QDII-LOF) issued 15 premium risk warning announcements.

Why are these two foundations frequently issuing premium risk warning notices? In response, industry insiders pointed out, “This is due to Nvidia's rapid rise, which has led to a rise in market investment enthusiasm, and many investors who are unable to directly invest in US stocks choose to invest indirectly by purchasing QDII funds. On the other hand, due to the small size of some funds and small market turnover, overall liquidity is not strong enough, and it is easy for speculative funds to quickly inflate prices.”

However, it is worth noting that not all funds that issue premium risk warning announcements face the problem of low turnover. Take Invesco Great Wall NASDAQ Technology ETF (QDII) as an example. According to data from the Shenzhen Stock Exchange, the fund's turnover in recent working days has exceeded 700 million yuan.

Two funds are heavily invested in Nvidia

According to its recruitment brochure, the above two funds are products that use a complete replication method to passively track the index. Among them, the Invesco Great Wall NASDAQ Technology ETF (QDII) tracks the NASDAQ Technology Market Capitalization Weighted Index, while the E-Fangda S&P Information Technology Index tracks the S&P 500 Information Technology Index. Of these two indices, Nvidia has more weight.

According to the fund's quarterly report, the market value of Nvidia shares held by these two funds accounted for more than 10% of the net worth. As of the close of trading on Friday EST, Nvidia has increased by 166.38% this year, contributing quite a bit of revenue to the two funds.

Among them, Nvidia was the largest holding stock of Invesco Great Wall NASDAQ Technology ETF (QDII) at the end of the first quarter of this year. The fund holds 160,900 Nvidia shares with a market value of approximately RMB 1,032 billion, accounting for 14.33% of the net worth.

In addition, among the fund's top five holdings at the end of the first quarter, Meta and Google also achieved significant gains. By the close of last Friday EST, the two companies had increased by 42.84% and 26.74%, respectively.

Let's also look at the E-Fangda S&P Information Technology Index (QDII-LOF). Nvidia is the fund's third-largest holding stock at the end of the first quarter of this year. The fund holds 16,800 Nvidia shares, with a market value of about 108 million yuan, accounting for about 15.73% of the net worth.

In addition, among the fund's top five major stocks, Broadcom's gains were also high. Broadcom is also a chip stock. As of the close of trading on Friday EST, the stock has risen by 56.17% this year.

Due to the good performance of heavy stocks, the above two funds have performed well since this year.

In terms of performance, Tiantian Fund Network data shows that as of June 13, since this year, the earnings of the Invesco Great Wall NASDAQ Technology ETF (QDII) were 33.45%, and the earnings of the E-Fangda S&P Information Technology Index (QDII-LOF) were 26.32%.

Retail hype is rampant, industry insiders suggest risks

In the midst of this investment boom driven by Nvidia, many retail investors have also taken action. In addition to directly trading transactions on the secondary market, some retail investors also participate in hype through “tractor account subscriptions” and “escrow arbitrage” methods.

Recently, on social media, netizens often post “teaching posts” using “tractor accounts” to participate in QDII investments.

Due to the limited investment amount of QDII, some popular funds often limit the subscription amount, so some investors will choose to unify 3 shareholder accounts and 3 fund accounts into one brokerage firm for management and trading, form tractor accounts, and use 6 accounts to purchase funds. In this way, the amount that can be purchased can reach 6 times the subscription limit. However, only some brokerage firms support this feature.

After a successful subscription through a normal subscription or tractor account, some investors will participate in the investment of ETF funds with a clear premium through the “transfer escrow arbitrage” method. That is, after purchasing the fund off-market, they will convert the fund into an on-market fund, sell it on the market, and enjoy premium benefits. However, some institutions will charge a certain fee for transfer to escrow, and funds purchased on some third-party platforms cannot be transferred to escrow.

What are the risks associated with the above operation? An insider at a major brokerage firm in Beijing told reporters, “First, QDII fund subscriptions do not arrive in real time. Some QDII funds can only be sold on Thursday after being purchased on Monday. If an unexpected incident occurs during this period, leading to a decline in hype, investors will face certain losses. Furthermore, if the liquidity of a fund is poor, investors may also experience 'stamped' when selling on the market. Under such circumstances, if they do not accumulate a lot of profit in the early stages, they will often face the situation of selling at a loss.”

“In addition, escrow transfer cannot be converted in real time. Some institutions also charge a certain fee for transfer to escrow. The time cost and cost of the transfer operation are risk factors affecting investors' returns.” The source added.

Is the US stock tech sector still worth investing in?

The two US tech-themed funds mentioned above still have certain premiums in the short term, and market trading and short-term speculation will face many risks. Looking at the idea of long-term investment, what is the investment value and risk of the US stock technology sector?

Some industry insiders believe that the current risk of US stocks is manageable, and investors will continue to pay attention to the investment value of the US stock technology sector. Other industry insiders pointed out that US stocks may remain volatile at a high level, while investing in the US stock technology sector, we need to pay attention to the risk of differentiation in the fundamental performance of individual stocks.

Invesco Great Wall NASDAQ Technology ETF (QDII) fund manager pointed out in this year's quarterly report that the strengthening of interest rate cut expectations will help the three major stock indexes remain stable. US stock assets that have risen since last year have released some pressure from the valuation side. At the same time, the resilient economy has continued to improve corporate profits, and the current risk of US stocks is still relatively manageable. Technological innovation, represented by artificial intelligence, is in full swing. Currently, the profit forecasts of technology leaders are generally optimistic. Combined with the decline in risk-free interest rates in 2024, it is expected that technology stocks will continue to show strong performance. Overseas investment is an essential part of domestic residents' asset allocation, and it is recommended to keep an eye on overseas technology investment products.

The Wealth Management Department of Guangfa Securities pointed out that the overall molecular segment of US stocks has maintained a steady growth trend, but it is necessary to pay attention to internal fundamental divisions brought about by overall recovery and AI investment and implementation. At the same time, attention should be paid to disturbances on the denominator side of the Federal Reserve hawks under stubborn inflation. It is expected that US stocks will maintain a high level of volatility.