A cross-border ETF refers to an ETF that tracks an offshore index, also known as a cross-border index. Different from domestic ETFs, the investment scope of cross-border ETFs covers overseas markets, and its portfolio includes a number of overseas-listed ETFs.
Cross-border ETFs include not only the equity ETFs we are familiar with, but also fixed income ETFs and commodity ETFs. In addition to Hong Kong stock ETFs, it also covers major economies and markets in the world, such as the United States, Japan, Germany, and Southeast Asia. Representative varieties include the S&P 500, NASDAQ 100, Nikkei 225, German DAX30, etc.
The emergence of cross-border ETFs has provided investors with more investment opportunities and asset allocation options. By purchasing cross-border ETFs, investors can easily invest in overseas markets and share in the opportunities of global economic growth.
1.Exchange rate risk: Cross-border ETF investment involves the conversion of different currencies, so exchange rate fluctuations may have an impact on investors' investment returns.
2.Market risk: Cross-border ETF investment requires investors to have a certain understanding of foreign markets, and if investors misjudge foreign markets, it may lead to investment losses.
3.Legal risks: Cross-border ETF investment needs to comply with the laws and regulations of various countries, and investors may face legal risks if they do not understand foreign laws and regulations.
4.Credit risk: Investors in cross-border ETFs may be exposed to credit risk if the issuer of these assets defaults on foreign investments** or bonds.
5.Political risk: Cross-border ETF investment will also be affected by political factors in the target country, such as policy changes, economic reforms, etc., which may have an impact on investors' investment returns.
6.Liquidity risk: In some cases, cross-border ETFs may face liquidity issues, i.e. difficulty in buying and selling or buying and selling** that does not meet investors' expectations.
7.Tax risk: The income of a cross-border ETF may be affected by the tax policies of the target country, and if you do not understand the local tax policies, you may be exposed to tax risks.