Author Topic: Invest in China Index ETF???  (Read 3566 times)

VanityFIRED

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Invest in China Index ETF???
« on: September 01, 2015, 09:31:36 PM »
I don't know much about investing in non-US markets/companies, but I am wondering if anybody has considered investing in an index fund or ETF that attempts to track the Chinese stock market...? 

Something like ASHR, for example.  It's down over 50% in a couple months.

I understand that ASHR has an expense ratio of ~0.8%, which seems high for an index fund AND it only has a dividend of <0.3% which also seems low.  I'm just curious what the collective opinion on something like this might be.

Thoughts?

Thanks in advance!

sirdoug007

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Re: Invest in China Index ETF???
« Reply #1 on: September 01, 2015, 10:41:09 PM »
Are you a glutton for punishment?  Have you heard the saying "don't try to catch a falling knife?"

The trailing P/E of the Shanghai market is around 50 now (http://www.businessinsider.com/chinas-economy-is-changing-2015-9).  The S&P500 is at around 19.  In addition to that, the Chinese market is constantly manipulated by the Chinese government.  Why would you want to play in that arena?

Stay away! Especially if, as you said, you have little experience in non-US markets.

dungoofed

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Re: Invest in China Index ETF???
« Reply #2 on: September 01, 2015, 11:09:17 PM »
Also careful not to be tricked by the use of the word "index" - firms that have traditionally specialised in "active management" are now jumping on the indexing bandwagon, albeit with fees you'd expect in an actively managed fund.

bensdlch

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Re: Invest in China Index ETF???
« Reply #3 on: September 02, 2015, 08:43:19 AM »
Many firms derive significant business from China.

A much safer option to get exposure to China is buy a very broad ETF.  Vanguard has something called the Total Stock Index.

Keep in mind, the Chinese halted trading on half of stocks listed in China in August. A pure Chinese ETF is extremely risky.

hodedofome

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Re: Invest in China Index ETF???
« Reply #4 on: September 02, 2015, 09:58:12 AM »
If you must, I'd choose ASHR over FXI. A shares have been off limits to most people outside of China for years, and this is one ETF that's supposed to give you access to that.

Heckler

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Re: Invest in China Index ETF???
« Reply #5 on: September 02, 2015, 02:01:32 PM »
https://personal.vanguard.com/us/insights/article/fund-announcement-062015

A small percentage of China in emerging markets is enough for me.  3% of my stashe is VEE:ca (aka VWO:us). Well, now just 2.5%
« Last Edit: September 02, 2015, 02:04:24 PM by Heckler »

mizzourah2006

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Re: Invest in China Index ETF???
« Reply #6 on: September 02, 2015, 02:22:59 PM »
Are you a glutton for punishment?  Have you heard the saying "don't try to catch a falling knife?"

The trailing P/E of the Shanghai market is around 50 now (http://www.businessinsider.com/chinas-economy-is-changing-2015-9).  The S&P500 is at around 19.  In addition to that, the Chinese market is constantly manipulated by the Chinese government.  Why would you want to play in that arena?

Stay away! Especially if, as you said, you have little experience in non-US markets.

This. China is down 50% YTD, but it went on an enormous run to the point where it made the NASDAQ P/E of 2001 look cheap. It is still drastically over-valued.

BrickByBrick

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Re: Invest in China Index ETF???
« Reply #7 on: September 02, 2015, 05:08:40 PM »
The Chinese government wants all the good, but cannot tolerate the bad because it makes them appear not in control.  So they blatantly falsify statistics and data, including prices.  They have the power to simply shut down whatever isn't behaving the way they'd like it too.  It will be interesting to see how China's burgeoning middle class ultimately responds to this.

All that to say, the Chinese stock market cannot even be trusted fundamentally - why dive into it?

VanityFIRED

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Re: Invest in China Index ETF???
« Reply #8 on: September 02, 2015, 07:34:55 PM »
So... if I understand this correctly... it's not going to snap back up to record highs within 3 years like the S&P did back in 2011?

I'll just keep putting my cash in VTSAX, boring as it may be.

Thanks for the feedback.

StockBeard

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Re: Invest in China Index ETF???
« Reply #9 on: September 04, 2015, 03:22:06 PM »
I'm with Schwab. They don't have a "total market" fund like Vanguard does, so I did invest into one of their "emerging markets" ETF (based on: http://www.bogleheads.org/wiki/Three-fund_portfolio#cite_note-9 ). I'm down 23% so far (i.e. the value is now 77% of what I've invested. Not down 23% since "all time high").

Following the "buy low, sell high" rule of rebalancing, I will actually buy more of that some time soon. I'm following my plan. From my perspective, looking at P/E, etc... is trying to do what fund managers do, "playing" the market. I'd rather stupidly follow my target portfolio.

Now, if you're already with a "total market" fund or ETF, there's probably no good reason for you to look into China. You already have some of it in your portfolio at this point.