Digital Technology: A Diversification Opportunity Often Overlooked by Investors — E Fund Digital Tech ETF (3434.HK)

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In the current investment environment, aside from the AI technology wave, there are certain investment themes that investors tend to overlook, such asthe digital technology sector.

It should be specifically noted thatdigital technology is not synonymous with cryptocurrency.Cryptocurrencies are just one component of digital technology, which more broadly encompasses the digital transformation of the financial industry, FinTech innovation, digital payments, blockchain applications, and growth opportunities arising from traditional financial institutions adopting new technologies. These areas are more closely linked to macroeconomic conditions and the traditional financial system.

The digital technology sector is characterized by relatively high sensitivity to economic conditions.When signs of macroeconomic recovery or improved risk appetite emerge, this sector often demonstrates notable resilience. So far this year, market focus has largely centered on geopolitical risks and stagflation concerns, driving capital toward themes with stronger certainty, such as AI. As a result, many digital technology–related companies have underperformed compared to firms in the AI supply chain. Nevertheless, even in this cautious market environment, the digital technology sector has still shown a degree of resilience.

According to Bloomberg data, as of May 28, 2026, certain digital asset and FinTech–related companies have delivered relatively strong performance: Circle, Block, and $IREN Ltd (IREN.US)$ have risen approximately 36%, 14%, and 70% year-to-date, respectively—outperforming the S&P 500’s 10% gain over the same period. Among them, Circle and Block have also outpaced $Nasdaq Composite Index (.IXIC.US)$ ’s 16% increase. Circle has benefited from growing stablecoin usage, while IREN has pivoted toward digital infrastructure. In the Hong Kong market, Standard Chartered, which is actively expanding into the digital economy, has gained about 12% year-to-date, significantly outperforming $Hang Seng Index (800000.HK)$ ’s roughly 2% decline and $Hang Seng TECH Index (800700.HK)$ ’s 9% drop over the same period.

This shows that even when market attention isn’t squarely focused on the sector, select high-quality companies within the digital technology space still possess notable downside resilience and the potential to generate alpha. These companies could deliver excess returns relative to the broader market when risk appetite improves in the future.

However, it should be objectively noted that performance within the digital technology sector is highly divergent. While the aforementioned companies have demonstrated strong resilience, many stocks in the sector have underperformed the broader market this year. According to Bloomberg data as of May 28, 2026, Robinhood (HOOD) has declined approximately 25% year-to-date; in the Hong Kong market, Alibaba and Tencent have fallen about 15% and 28%, respectively, since the start of the year.

These stocks have underperformed,primarily due to factors such as the macroeconomic environment, company-specific risks, and regulatory policies.This highlights that the digital technology sector is still in a developmental stage, with high uncertainty among individual stocks and significant idiosyncratic (non-systematic) risks.

Therefore, when investing in the digital technology sector,diversificationis especially critical. A basket-based approach can effectively mitigate the idiosyncratic risk of any single stock. $EFUND DIGITAL ETF (03434.HK)$ ETFs offer a low-cost, efficient diversification tool, enabling investors to participate in the long-term growth opportunities of the entire digital technology sector in a relatively balanced manner.

Investment rationale behind the digital technology index

The ETF tracks theWind Digital Technology Net Total Return Index” is a representative index capturing this thematic segment. The index selects approximately 30 listed companies in the digital technology sector from both the Hong Kong and U.S. markets, covering multiple segments including digital asset infrastructure, FinTech services, blockchain applications, and the digital businesses of major tech giants.

Top 10 holdings of the ETF:

$STANCHART (02888.HK)$ , weight: 13.02%

Actively developing digital assets, stablecoins, and cross-border digital payment services, it is a representative of traditional banks undergoing digital transformation.

$HKEX (00388.HK)$ ,, weight: 10.17%

Actively building a digital asset trading and blockchain settlement platform, it serves as core infrastructure for Hong Kong's digital asset market.

$BABA-W (09988.HK)$ , weight: 9.02%

Leveraging Alibaba Cloud and Alipay services, it possesses a robust digital payments and e-commerce technology ecosystem.

$TENCENT (00700.HK)$ , weight: 8.52%

Owns the vast WeChat Pay ecosystem and has made deep strategic investments in cloud computing and AI.

$Robinhood (HOOD.US)$ , weight 8.27%

A major U.S. retail investment platform, aggressively expanding cryptocurrency trading services

$XIAOMI-W (01810.HK)$ , weight 7.57%

Driving integration of digital payments and consumer tech through Xiaomi Finance and its IoT ecosystem

$Strategy (MSTR.US)$ , weight 5.69%

The world's largest publicly listed company by Bitcoin holdings, with a core strategy centered on heavy positions in digital assets

$Coinbase (COIN.US)$ , weight 5.02%

One of the world’s largest cryptocurrency exchanges, offering comprehensive digital asset trading and custody services

$Block (XYZ.US)$ , weight 3.98%

Focused on fintech and the Bitcoin ecosystem, providing digital payment and trading services through Cash App

$ZA ONLINE (06060.HK)$ , weight 3.51%

China's leading internet insurer, actively expanding its digital asset business

(Source: Bloomberg, as of May 28, 2026)

The top 10 holdings of this ETF account for approximately 75% of total assets, collectively forming a comprehensive ecosystem encompassing digital asset trading, payments, cloud services, and fintech.

Investors can view this index as"a representative benchmark of the digital finance ecosystem". It not only tracks price movements of digital assets but also captures long-term growth opportunities across the entire digital asset ecosystem—including trading infrastructure, financial service innovations, and technological applications—making it suitable for investors seeking greater portfolio diversification.

E Fund (Hong Kong) Wind Digital Technology Index ETF (3434.HK)closely tracks the aforementioned index, offering investors a convenient, one-stop tool to gain exposure to the digital technology sector.

This ETF is suitable for investors seeking to enhance diversification in their portfolios. It tracks the long-term growth trend of digital assets, enabling investors to participate in long-term opportunities in the digital technology sector in a relatively balanced manner.

E Fund's Diversified Allocation Philosophy

Amid the rapid evolution of technology and the global business environment, a single investment theme can no longer fully capture opportunities across different market cycles. E Fund (Hong Kong) continues to provide investorswith investment tools covering multiple market-leading themes this year, including high dividend yield, AI-driven growth, and Asian semiconductors.。

Building on this foundation,E Fund Digital Tech ETF (3434.HK) serves as an allocation tool for the digital technology sector, effectively complementing exposure to the digital finance ecosystem within an investment portfolio. It offers investors a low-cost, one-stop solution to participate in the long-term development of digital assets and fintech and capture associated growth opportunities, thereby enhancing the balance and resilience of overall asset allocation and supporting long-term wealth appreciation.

Investor Education Content:

E Fund Digital Tech ETFwas officially listed on February 6, 2026. As it has only recently launched, its current assets under management are relatively small, and trading volumes remain light.

Investors should correctly distinguish between 'low trading volume' and 'liquidity risk.' Trading volume is primarily influenced by market conditions and investor interest in specific themes, whereas liquidity risk is mainly reflected in the bid-ask spread.

As an ETF product, liquidity is primarily provided by market makers, whose core objective is to keep the fund's market price closely aligned with the net asset value (NAV) of its underlying index. Even if trading volume is relatively low, investors can generally still trade at a reasonable spread, avoidingsituations where they are unable to buy or sell.. Therefore, this type ofproduct is more suitable for medium- to long-term investment strategiesrather than frequent short-term trading.

Important Notice

The issuer of this content is E Fund Asset Management (Hong Kong) Co., Ltd. This content is for reference only and does not constitute an invitation or recommendation to invest in fund units. This content is for display purposes only and should not be shown to any person for whom such display would be illegal. Investment involves risks, and you may lose a significant portion of your principal. Before investing, investors should carefully read the fund prospectus (including the "Risk Factors" section) to understand the investment risks associated with the fund. This content has not been reviewed by the SFC.

The E Fund (Hong Kong) Wind Digital Technology Index ETF (the 'Sub-Fund') is a sub-fund of the E Fund ETF Trust. The E Fund ETF Trust is an umbrella unit trust established under Hong Kong law. The Sub-Fund is a passively managed ETF as defined under Chapter 8.6 of the Securities and Futures Commission’s ('SFC') Code on Unit Trusts and Mutual Funds. Units of the Sub-Fund ('Units') are traded on The Stock Exchange of Hong Kong Limited ('HKEX') like stocks. The investment objective is to provide investment returns that closely track the performance of the Wind Digital Technology Net Total Return Index (HKD) ('Index'), before fees and expenses.

Since the sub-fund tracks the performance of two regions (Mainland China and the United States) and focuses on the digital technology theme, it is subject to concentration risk. Compared with broadly-based funds (e.g., global equity funds), the sub-fund may be more volatile due to its greater susceptibility to adverse conditions in Mainland China and the United States or fluctuations in the technology sector impacting the index value. The value of the sub-fund may be more easily affected by settlement risks, custody risks, and unfavorable economic, political, policy, foreign exchange, liquidity, tax, legal, or regulatory events affecting the markets in Mainland China and the United States.

For detailed important notices and disclaimers regarding the above fund, please visit E Fund Hong Kong’s website:
https://www.efunds.com.hk/tc/products/50/important/

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