Hang Seng Investment Management announced yesterday (April 28) that its Tracker Fund of Hong Kong (2800.HK) will distribute an interim dividend of HK$0.22 per unit for the fiscal year 2025. Today (April 29) marks the ex-dividend date, with the record date set for tomorrow (April 30). Eligible unitholders can expect to receive their dividends by May 30, continuing Tracker Fund’s tradition of semi-annual payouts. This reinforces its reputation as a stable dividend ETF that closely tracks the Hang Seng Index.

Launched in 1999 as Hong Kong’s first listed ETF, Tracker Fund has consistently aimed to replicate the Hang Seng Index’s performance. Its distribution policy is based on actual dividend income from its holdings after deducting necessary expenses, with interim and final dividends typically paid out in May and November, respectively. This latest HK$0.22 per unit payout marks an impressive 47% increase compared to HK$0.15 during the same period in 2024, and it also exceeds the five-year interim average of around HK$0.18. The sharp rise highlights improvements in corporate earnings across the market, notably among major financial and real estate companies.

Over the past few years, Tracker Fund’s dividend levels have closely reflected macroeconomic trends. During the pandemic in 2020, its interim distribution fell to HK$0.09 but gradually recovered alongside the economic rebound and corporate profit growth. The 2025 interim dividend now matches the pre-pandemic levels of 2019 (HK$0.15-HK$0.23) and is the highest since 2021, signaling management’s confidence in the dividend outlook for Hong Kong equities.

Investors should pay close attention to the ex-dividend and record dates. To qualify for this payout, shareholders must have held Tracker Fund units before market close today (April 29). The record date for CCASS holdings is set for April 30. Historically, Tracker Fund’s unit price adjusts downward by the dividend amount on the ex-dividend date, although overall market sentiment and volatility can cause additional short-term price movements.

For income-focused, long-term investors, Tracker Fund’s appeal has strengthened further. Based on the estimated full-year dividend for 2025 (adding HK$0.22 interim and HK$0.62 final dividend from 2024, totaling roughly HK$0.84) and the current unit price, the indicated dividend yield stands at approximately 3.2%, higher than the average yield of around 2.8% for Hong Kong stocks. Combined with its index-replication strategy that keeps volatility in line with the broader market, Tracker Fund makes a compelling case for investors seeking steady, long-term returns.

The market responded positively to the dividend announcement. Tracker Fund’s unit price edged up 0.3% yesterday afternoon, with trading volume exceeding HK$1.2 billion, reflecting strong investor enthusiasm. Analysts noted that the dividend uptick was largely driven by core financial and property holdings such as HSBC Holdings (0005.HK) and AIA Group (1299.HK), both of which boosted their payout ratios recently.

That said, some market watchers caution that the sustainability of dividend growth could be challenged if the Chinese renminbi continues to weaken, given that many of Tracker Fund’s constituents derive significant revenue from mainland China. Nevertheless, Tracker Fund’s management expense ratio remains low at around 0.066%, helping safeguard investor returns.

From a portfolio construction perspective, Tracker Fund remains highly representative of the Hong Kong market. As of April 2025, its top 10 holdings – including Tencent Holdings (0700.HK), Alibaba Group (9988.HK), and China Construction Bank (0939.HK) – collectively account for 55.3% of the portfolio. This provides diversified exposure across both the tech and financial sectors. Over the past three years, Tracker Fund’s total return (with dividends reinvested) has averaged 6.8% per year, outperforming the 5.2% annualized price-only return of the Hang Seng Index and highlighting the power of dividend reinvestment for long-term growth.

Looking ahead, the fund manager has indicated plans to continue optimizing the portfolio in line with any upcoming changes to the Hang Seng Index constituents. With southbound inflows through Stock Connect programs gaining momentum, high-dividend ETFs like Tracker Fund are expected to remain in strong demand, enhancing both liquidity and scale. Investors should also watch for the results of the Hang Seng Index’s quarterly review in May and upcoming earnings announcements that could offer further clarity on final dividend expectations for the second half.