Recently, capital has been continuously flowing into dividend-related ETFs, with several reaching record-high sizes since listing. What is the future investment value of the dividend sector? HuaAn Fund stated that the dividend sector demonstrates significant long-term investment potential and may benefit from the recent market rotation from high- to low-valuation stocks. Moreover, combining SOEs (state-owned enterprises) with dividends could achieve a "1+1>2" synergistic effect.

The Hong Kong dividend sector has historically delivered substantial excess returns, outperforming both the Hang Seng Index and the CSI Dividend Index. As of November 10, the Hong Kong Dividend Index offers a dividend yield of 5.80%, higher than the CSI Dividend Index's 4.22%, with superior valuation attractiveness. Even after deducting the Hong Kong Stock Connect dividend tax, it still leads bank wealth management products and most fixed-income-plus products.

Regarding the investment value of the dividend sector, Ni Bin, fund manager of HuaAn's Hong Kong Stock Connect Central SOE Dividend ETF, noted that compared to growth-oriented tech sectors, the dividend sector is less crowded, has seen smaller gains year-to-date, and offers more compelling valuations, making it well-positioned to attract capital shifting from high- to low-valuation stocks. High-dividend companies also exhibit multiple high-quality characteristics, including stable profitability, solid fundamentals, strong cash flows, and lower volatility. They typically operate mature business models, enjoy stable industry structures, possess competitive advantages, and prioritize shareholder returns.

Against the backdrop of a weak economic recovery, these attributes of dividend assets become even more valuable. Additionally, as China's economic development shifts from high-speed to high-quality growth, investment paradigms are transitioning from pursuing high growth to emphasizing quality. Meanwhile, the long-term interest rate trend is expected to continue declining, further highlighting the relative advantages and strategic importance of high-dividend investments.

"SOE reforms are advancing steadily, with continuous optimization of performance evaluation systems for central SOEs, driving improvements in operational efficiency and cash flows. In the first three quarters of 2025, central SOEs demonstrated robust profitability, with annualized ROE significantly outperforming the broader A-share market. However, central SOE-listed companies have long faced undervaluation, with market valuations mismatched to their economic significance. Driven by both market-cap management incentives and improving profit quality, central SOEs exhibit strong dividend willingness and capability, potentially leading to valuation re-rating in the future," Ni Bin added.

HuaAn Fund's index investment team pioneered the Hong Kong Stock Connect Central SOE Dividend ETF (513920), the market's first ETF combining Hong Kong stocks, central SOEs, and dividends. It remains the only ETF tracking the Hang Seng Hong Kong Stock Connect China Central SOE Dividend Total Return Index.

The Hang Seng Hong Kong Stock Connect China Central SOE Dividend Total Return Index has three key features: 1. **Lower Valuation**: The index shows exceptional valuation advantages, trading at historical lows with significant upside potential. As of November 11, 2025, its TTM P/E ratio was just 7.5x and P/B ratio 0.66x, notably lower than comparable indices like the Hong Kong Stock Connect High Dividend Select Total Return Index (TTM P/E 11.3x, P/B 1.18x) and the Guoxin Hong Kong Stock Connect Central SOE Dividend Total Return Index (TTM P/E 9.7x, P/B 0.90x). It also undercuts the broader Hong Kong market's valuation levels, offering strong safety margins.

2. **Lower Volatility**: The index exhibits excellent volatility control, with defensive attributes. Backed by the leading positions of its central SOE constituents and defensive sector exposures, its annualized volatility has remained stable at 15%-20%. Over the past three years, its annualized volatility stood at just 18.88%, lower than the Hong Kong Stock Connect High Dividend Select Total Return Index (21.58%) and the Guoxin Hong Kong Stock Connect Central SOE Dividend Total Return Index (19.91%). During the 2024 market turbulence, its maximum drawdown was over 30% smaller than the Hang Seng Index's, highlighting its superior risk resilience.

3. **Superior Returns**: The index has delivered outstanding long-term performance, rising over 39% year-to-date, significantly outpacing peers like the Hong Kong Stock Connect High Dividend Select Total Return Index (27%) and the Guoxin Hong Kong Stock Connect Central SOE Dividend Total Return Index (26%), underscoring its competitiveness as a high-quality dividend strategy.

**Risk Disclosure**: The Hong Kong Stock Connect Central SOE Dividend ETF carries an R3 (moderate risk) rating. Past index performance does not guarantee future results, and fund investments involve risks. The fund manager does not promise profits or minimum returns. Performance of other funds managed by the same manager does not indicate future results. Investors should review the fund's prospectus and legal documents carefully. Investments in Hong Kong stocks via Stock Connect entail unique risks due to differences in market environment, instruments, regulations, and trading rules. HuaAn Fund manages this product; distributors assume no responsibility for investment, redemption, or risk management.