Asia Pacific - Moderately adventurous or too risky?

supersadie

I have some money I'd like to put in the best possible medium term vehicle. Having divided it into portions and used the cash ISA allowance for both me and the kids, I'm thinking about a stocks and shares ISA. Am thinking a passive fund with low TER. So a tracker for security but something more exciting than the FTSE All Share. Considering Asia Pacific excluding Japan.
Could anyone with some experience comment on whether they think an Asia Pacific ex Japan tracker would fall into the 'slightly more adventurous but not too risky category'? Alternatively - where I could read an expert opinion of this market going forward.
Big thanks in advance.

System

There will be lots of questions coming in from posters asking what time frame you are looking at, what is your attitude to risk etc etc It is very difficult to get a solid fund recommendation over a forum due to lack of information.

Generally asia pacific / emerging market areas are seen as higher risk (much riskier than say a strategic bond fund or an absolute return fund).

Generally a stocks and shares portfolio should cover a number of areas, rather than putting your eggs in one basket. You may want to take financial advice from a professional.

However I decided to DIY it when it came to my S+S ISA. Sites to look at include Hargreaves Lansdown, Trustnet, Morningstar, Bestinvest to name a few.

grizzly1911

+1 for Trustnet and MorningStar

People seem to suggest only using trackers in mature markets but using managed funds in newer markets.

redbuzzard

Equity funds of any kind are at the risky end of the scale - they are volatile, and if we get another 2008 you could be down 40% in quick time. Pacific will likely be more volatile than FTSE AS, but could have good returns of course.

I like index funds and low charges, being a fan of Tim Hale, but I do have a spread (FTSE AS, Pacific, Japan, American, European) to spread the currency risk a bit - volatility wise they all score pretty high and are largely correlated - and a reasonable horizon, plus some less volatile holdings - at the moment that is mainly absolute return (Standard Life GARS is my favourite, and I'd rather hold that than bonds or cash right now).

You won't find much commentary on index funds, nothing to comment on being passive, so look for the market commentary.

Maybe have a look at the Tim Hale book (Smarter Investing) yourself if you haven't seen it - the best £10 I ever spent I think.

This is just general comment, not advice of course. My crystal ball attachment seems to have gone on the blink ;-)

mark78_2

I'm just learning myself but if medium term is well over 5 years closer to 10 then I think it is of a lower risk than western economies but that's my opinion. You would still certainly want to balance it out in a well diversified portfolio. I go with fairly low cost investment trusts which are performing nicely in asia.

atush

As opposed to other equity investments I'd call it medium As many asian markets are more developed and less emerging as we go along.

Too many above are getting bogged down in the time/investment debate. The OP wants to talk investments, not cash. And said medium term which to me means in excess of 5 years.

I invested in Aberdeen Asian smaller companies trust more than 5 years ago. It has been a star- wish I had more readies that the time lol.

redbuzzard

mark78 wrote: »

I think it is of a lower risk than western economies but that's my opinion.

I should take more care when using the terms risk and volatility interchangeably, and maybe supersadie could clarify what she? perceives "too risky" to mean.

I tend to agree that medium term+ the Pacific index is probably not super risky cf. say FTSE AS, simply because it is a complete regional market, and more developing than UK at that - even if that is priced in to the lower yield. As an index fund, it's certainly less risky than stock-picking; as a medium-long term investment, middling risk and a reasonable place to look.

Small 'but' - it is currently c. 30% Australia, and the AUD has strengthened a lot over the last 3-4 years v. GBP - that on its own would make you think about currency risk, even if you wouldn't bet on a strong pound either...as an example, many US investors in Japan haven't captured the rise in the Nikkei this year because the yen has dropped against the dollar (we did OK because the pound actually weakened v the yen).

Risk is sometimes referred to when people (including professionals) mean volatility, probably because in the short term they look very similar - would the OP mind if there was a 30% drop in equity markets in 2014? Would she consider that a characteristic of high risk?

On balance, I would say it is risky - riskier than the FTSE AS - equity markets are volatile, and you also have currency risk. But the chance of higher gains is there too.

But I still like equity index funds. I spread the foreign currency ones around a bit, don't overdo them, am aware that I am betting on currencies, (watching out for a strengthening pound which would ring alarm bells), and have a core of UK based or or GBP-hedged funds.

Just thoughts, not advice, and something for any passing experts to shoot at.

I wish I'd bought Aberdeen Asia Smaller Companies 5 years ago too ;-)

Linton

atush wrote: »

As opposed to other equity investments I'd call it medium As many asian markets are more developed and less emerging as we go along.

Too many above are getting bogged down in the time/investment debate. The OP wants to talk investments, not cash. And said medium term which to me means in excess of 5 years.

I invested in Aberdeen Asian smaller companies trust more than 5 years ago. It has been a star- wish I had more readies that the time lol.

Agree that for the longer term investor the Far East is medium risk as equity investment goes. But you do need to watch what your chosen fund invests in. Some may invest to a significant extent in Australian minerals, others regard Australia as outside their remit. I would take the latter view as I invest in the Far East for its internal expansion and the strength of its technology companies. If one wanted to invest in minerals there are more appropriate funds.

grey_gym_sock

i don't think asia pacific is an especially risky region. going all in 1 region of the world, rather than investing more broadly, is more risky, whatever region you pick.

an asia pacific tracker can either include only developed markets (meaning: HK, singapore, australia, NZ, and maybe s. korea - FTSE indexes classify s. korea as developed, MSCI indexes classify it as emerging) ... or it can also include the more-advanced emerging markets (the bigger ones include: taiwan, malaysia, thailand) ... but the majority of the value will be in the developed markets.