Principal S&P Ethical Asia Pacific Dividend ETF: A Comprehensive Financial Year Review and Strategic Outlook (30 June 2024)

Summary Report for Principal S&P Ethical Asia Pacific Dividend ETF

Report Date: 30 September 2024
Financial Year Reporting: Financial year ended 30 June 2024

Key Facts in the Report

1. Fund Overview: The Principal S&P Ethical Asia Pacific Dividend ETF is designed to track the performance of the S&P Ethical Pan-Asia Select Dividend Opportunities Index. The Fund focuses on capital growth and dividend income, investing in the top 40 high-yielding stocks in the Asia Pacific region.

2. Performance:

   • 1-year return: 13.18% (compared to the Index’s 15.57%).
   • Since inception (8 March 2012): 15.06% cumulative performance.

3. Top Holdings (as of 30 June 2024):

   • The top 10 holdings comprise approximately 40% of the Fund’s net asset value (NAV), with notable investments in companies like SITC International Holdings Co Ltd, China Shenhua Energy Co Ltd, and China Petroleum & Chemical Corp.

4. Geographical and Sector Allocation:

   • Geography: The Fund’s largest exposure is to Hong Kong (28.58%), China (23.98%), and Australia (21.32%).
   • Sectors: Significant investments in Financials (29.26%), Energy (17.90%), and Real Estate (17.10%).

5. Dividends: The Fund declared a distribution of USD 0.032 per unit for the financial year, totaling USD 912,000.

6. Expense and Turnover Ratios:

   • Expense Ratio: 1.22% (2024) compared to 1.09% (2023).
   • Turnover Ratio: 35.74% (2024) compared to 62.59% (2023).

Special Activities and Actions for Profitability

1. Subscription and Redemptions: The Fund saw total subscriptions of USD 2,363,000 (equivalent to 3.5 million units) with no redemptions during the year.

2. Investment Themes: The Fund benefited from Asia’s strong performance over the past year, driven by factors like increased demand for advanced chips due to AI and the semiconductor industry’s recovery.

3. Policy Shifts: The Fund’s exposure to regions like China responded positively to policy shifts that aimed at reviving domestic demand, particularly in the property market.

Investor Recommendations

1. Current Holders:

   • The Fund has shown positive returns over the past year, with a focus on stable, high-yielding companies in the Asia Pacific. Given the Fund’s diverse exposure and positive outlook, existing investors might consider maintaining their holdings to benefit from potential future growth.

2. Potential Investors:

   • For those not currently invested, the Fund presents an opportunity to gain exposure to ethical, high-dividend stocks in the Asia Pacific region. However, they should consider market conditions and the fund’s expense ratio before making investment decisions.

Disclaimer

The above recommendations are for informational purposes only and should not be considered as financial advice. Investors are advised to consult their financial advisor to consider their own risk tolerance and investment objectives before making any investment decisions.