HSBC Far East ETF Tracker: Any Views Please?

polybear

Hi All,

I'm thinking of investing in the following fund (10K minimum):

http://www.thisismoney.co.uk/investing/article.html?in_article_id=515643&in_page_id=166

Any thoughts/views etc. would be much appreciated (I already have a good selection of cash savings/isas as well as existing tracker investments covering mainly the UK but a little in Europe/US/Japan/Pacific also. My ISA allocation is maxed out for this year and I'm investing for capital growth over the medium to longer term. Many thanks.

polybear

polybear

shameless bump!

sabretoothtigger

This looks slightly different from the more usual asia pacific trackers. I think those removed hong kong from its index but it would cover south korea and taiwan.

I dont know if you like these countries especially. Maybe you should compare it to other similar trackers, a normal pacific tracker is probably safer and includes australia.

Also there is bric which seems kinda similar to this except thats all around the world. They mention an Aberdeen fund, that would combine all three types and I prefer that choice even though it costs more.

Also I think your minimum is 1k not 10

HSBC says its ETF gives investors exposure to 'the equity market performance of the largest companies in China (accessed through the Hong Kong market), Indonesia, Korea, Malaysia, Philippines, Taiwan and Thailand.' (This excludes Japan).

Check the msci index ? http://www.mscibarra.com/products/indices/international_equity_indices/gimi/stdindex/performance.html

Reaper

Although we are always told past performance is no guide to the future it is still useful to see if a fund manager has consistently beaten the market.

Since the EFT tracks an index I suggest you go to one of the charting sites and compare the best funds covering the region to the index it tracks. If they can't consistently beat it by more than their fees then go with the ETF.

shilcor

Reaper wrote: »

Since the EFT tracks an index I suggest you go to one of the charting sites and compare the best funds covering the region to the index it tracks. If they can't consistently beat it by more than their fees then go with the ETF.

I'm a relatively new investor who retired in April and wants to make the cash lump sum I took from my pension work better for me. I've already put some SAFE money in NS&I and built a shares portfolio of the best dividend paying companies. I've also put some money into one or two funds including BlackRock Gold & General and an HSBC All Shares Tracker to name two. I've always failed to understand exactly how an index tracker works and generates an income for investors. I appreciate that for an FTSE 250 fund for example, shares in all the companies in the FTSE 250 are held but over a long period the value of the FTSE doesn't continue to rise indefinitely. I was told by an IFA who was trying to get me to invest with him (yeah, fat chance!) that if I'd invested in the FTSE 10 years ago it's value was now exactly the same and I'd have made nothing. He obviously overlooked things like dividends and was trying to talk me into using him but in his example, if the FTSE value was the same at the start and end of a tracker fund investment, what actually generates return for me apart from dividends? I've read a lot about investments and a statement that comes up a lot is that most fund managers fail to beat a given index so you're better off with a low cost tracker. I'm interested in looking at ETF's that are easy to buy ( I use T.D.Waterhouse) and they seem to track all sorts of indexes.
Would anyone care to put me straight on exactly how tracker funds make money ?

Reaper

shilcor wrote: »

I appreciate that for an FTSE 250 fund for example, shares in all the companies in the FTSE 250 are held but over a long period the value of the FTSE doesn't continue to rise indefinitely.

Yes it does, though with ups and downs along the way.

I was told by an IFA who was trying to get me to invest with him (yeah, fat chance!) that if I'd invested in the FTSE 10 years ago it's value was now exactly the same and I'd have made nothing.

Look for yourself. Using your FTSE250 example go to this site and press the "10y" label. It has risen 61% over the last 10 years even with the recent crash.

EDIT: The FTSE100 has not done so well, but bear in mind these larger companies pay larger dividends too to make up for their lack of big growth prospects - it's easy for a tiny company to grow 50%, much harder for an already huge one to do the same.

He obviously overlooked things like dividends and was trying to talk me into using him but in his example, if the FTSE value was the same at the start and end of a tracker fund investment, what actually generates return for me apart from dividends?

In theory companies add value and therefore keep growing (though in a competitive environment not all). So they borrow investment money and grow by more than the amount they have borrowed. That money might be used to buy raw materials to make products to sell, machinary to make more products or make them faster, or research and development.

I've read a lot about investments and a statement that comes up a lot is that most fund managers fail to beat a given index so you're better off with a low cost tracker.

It's a controversial topic. It depends to a large extent which market you are looking at. Large cap USA shares for example are best covered with a tracker. This site has an article on it which says which areas are best server by trackers. Also when comparing tarckers with the average fund I suggest you don't buy average funds, buy the ones with an above average manager and compare the trackers with those. A useful tool for finding the best managers is on the Best Invest site here.

I'm interested in looking at ETF's that are easy to buy ( I use T.D.Waterhouse) and they seem to track all sorts of indexes.
Would anyone care to put me straight on exactly how tracker funds make money ?

As above, plus most trackers include dividends too.

shilcor

Thanks for a very detailed reply and some useful links. Do tracker funds automatically buy and sell stocks based on their performance or do they just buy and hold stocks ?

Aegis

shilcor wrote: »

Thanks for a very detailed reply and some useful links. Do tracker funds automatically buy and sell stocks based on their performance or do they just buy and hold stocks ?

Usually they automatically buy and sell in line with the current make-up of the index they are tracking.