Capture the global wave of pharmaceutical innovation! E Fund Biomedical ETF begins subscription on March 17, with its tracked index surging over 140% since inception.

Against the backdrop of deepening global population aging, the biomedical sector exhibits strong growth certainty driven by long-term inelastic demand. Data shows that the global biopharmaceutical market size reached $422.5 billion in 2024 and is expected to grow from $453.7 billion to $921.5 billion between 2025 and 2034 at a compound annual growth rate (CAGR) of 8.2%.

Currently, the biomedical sector is entering a prime investment window due to dual resonance in industrial fundamentals and capital cycles. On one hand, the financing environment for the global biotech industry has significantly recovered from the lows of 2023-2024. In 2025, global biomedical financing grew by 101%, while IPO fundraising in Hong Kong's 18A sector hit multi-year highs, with both primary and secondary market activities showing synchronized recovery.

On the other hand, dozens of key innovative drugs will reach critical clinical data readings and regulatory approvals within the next 2-3 years. Coupled with increased demand for global innovative asset acquisitions by Big Pharma amid patent cliffs, this provides continuous event-driven opportunities for the sector. Meanwhile, the Federal Reserve is currently in a rate-cutting cycle, with further rate cuts expected in 2026. Historically, biomedical assets have performed strongly during such cycles.

Against this backdrop, E Fund (Hong Kong) launched $EFund Biophar ETF (03186.HK)$ , providing investors with a new option to capture the growth potential of the global biopharmaceutical industry. The E Fund Biopharmaceutical ETF opened for subscription from March 17th to 19th.

1. Basic product information

II. Investment Highlights

2.1 The index covers global biopharmaceutical companies and shows impressive performance

The index tracked by the E Fund Biopharmaceutical ETF is the Solactive Biopharma Select Index, which is the world's first and currently a very rare biopharmaceutical index that focuses on the two core pharmaceutical markets of China and the US.

The latest total number of constituent stocks in the index is 100, including 30 Hong Kong-listed stocks and 70 US-listed stocks. However, the biopharmaceutical companies listed in the US come from all over the world, including Israel, Switzerland, Japan, the UK, Denmark, the Netherlands, etc. Excluding China and the US, there are 21 individual stocks from other global markets, accounting for 10.50% of the weight.

Specifically,The top ten constituent stocks in Hong Kong are all leading domestic innovative drug companies, including Hengrui Pharma, BeiGene, Hansoh Pharma, Innovent Bio, etc., each with an individual stock weight of 2.17%. Meanwhile, the top ten overseas constituent stocks include global pharmaceutical giants such as Eli Lilly and Co, Johnson & Johnson, AbbVie, Novo-Nordisk A/S, etc., each with an equal weight of 0.5%.

The index has shown outstanding long-term performance, with a cumulative increase of 140.31% since its base date, significantly higher than Hang Seng Biotech (11.66%) and the S&P Biotech Index (84.88%).Meanwhile, its short-term upside potential is stronger, with a return of 75.7% expected by 2025, and relatively smaller drawdowns during market downturn years.。

The equal-weight methodology gives higher weight to innovation.

Traditional market-cap weighted indices naturally overweight established industry giants while often underestimating small- and medium-sized companies with disruptive innovation potential. However, excess returns in the biopharmaceutical sector are precisely derived from breakthroughs and non-linear growth achieved by small and medium-sized enterprises. The approval of a blockbuster drug can potentially increase a company’s market value several-fold.

Based on the characteristics of the industry's development, the Solactive Biopharma Select Index adopts an equal-weight methodology, which offers the following advantages:

1) Diversified investment in sources of innovation: Each company (regardless of current market cap size) receives equal attention, increasing the portfolio’s exposure to 'breakthrough innovations,' while the defensive attributes of large pharmaceutical firms are 'diluted.'

2) Avoiding tail risk from individual stocks: Preventing the portfolio from becoming overly reliant on the future performance of one or a few large companies.

No quota restrictions for ETF Stock Connect

The E Fund Biopharma ETF meets the inclusion criteria for ETF Stock Connect, allowing mainland investors to invest through the Hong Kong Stock Connect without any quota restrictions, offering more convenient and flexible allocation.

III. Risk Warning

Important Information: 1. The E Fund (Hong Kong) Solactive Biopharma Select Index ETF ('Sub-fund') is a sub-fund of the E Fund ETF Trust, an umbrella unit trust established under Hong Kong law. The Sub-fund is categorized as a passively managed ETF under Chapter 8.6 of the Code on Unit Trusts and Mutual Funds issued by the Securities and Futures Commission ('SFC'). Units of the Sub-fund are traded on the Hong Kong Stock Exchange ('HKEX') like stocks. Its investment objective is to provide investment returns that closely track the performance of the Solactive Biopharma Select Index ('Index') (before deduction of fees and expenses). 2. Investment involves risks. The Sub-fund faces a) investment risks, b) stock market risks, c) new index risks, d) geographic concentration risks, e) political, economic, and social risks in Mainland China, f) concentration risks in the biopharmaceutical sector, g) risks associated with small- and mid-cap companies, h) securities lending transaction risks, i) different trading hours risks, j) passive investment risks, k) trading risks, l) tracking error risks, m) currency risks, n) risks of distributions being paid out of capital/actual payment out of capital. o) reliance on market maker risks, p) termination risks. The value of the Sub-fund can go up or down, and may even fall significantly. Investors may incur losses. 3. To the extent permitted by the Code on Unit Trusts and Mutual Funds, the Sub-fund may invest in financial derivatives for hedging or investment purposes. Under adverse circumstances, the use of financial derivatives may fail and/or result in significant losses to the Sub-fund. 4. Distributions from the Sub-fund may be paid out of capital. Investors should note that paying distributions out of capital is equivalent to returning or withdrawing part of an investor's original investment or any capital gains arising from such original investment, which will result in an immediate reduction in the net asset value of the relevant units. 5. The Sub-fund is traded on the exchange at market prices, which may differ from its net asset value. The offering document of the Sub-fund can be found at this website https://www.efunds.com.hk/products/. 6. The Index is a newly launched index with a very short operating history; investors cannot evaluate its past performance based on this. There is no guarantee of the Index’s performance. Compared with exchange-traded funds tracking indices with longer operating histories and larger scale, the Sub-fund may carry higher risks. 7. Since the Sub-fund's investments are concentrated in securities of biopharmaceutical companies listed in Hong Kong and the United States, which may be significantly affected by technological changes, increased government regulation, and fierce competition from rivals, the Sub-fund is exposed to sector and geographic concentration risks. Therefore, its net asset value may be more volatile than that of broadly diversified funds. 8. You should not invest in the Sub-fund unless the intermediary selling it to you has explained that the Sub-fund is suitable for you (considering your financial situation, investment experience, and objectives). 9. Investors should not make investment decisions based solely on this document. Before making any investment decision, investors should carefully read the Sub-fund's sales documents (including risk factors).

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