Vanguard China Select Stock Fund

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
User avatar
Topic Author
Barry Barnitz
Wiki Admin
Posts: 3353
Joined: Mon Feb 19, 2007 9:42 pm
Contact:

Vanguard China Select Stock Fund

Post by Barry Barnitz »

Hi:

Press release: Vanguard Announces Plans to Launch Active China Equity Fund
Vanguard today filed an initial registration statement with the U.S. Securities and Exchange Commission to introduce Vanguard China Select Stock Fund. The fund will invest in both onshore and offshore Chinese equities and is intended for clients seeking actively managed, high-alpha-target equity exposure to complement a broadly diversified portfolio. Vanguard expects to launch the fund in the first quarter of 2022.
Vanguard believes that exposure to China is an important part of both the equity and fixed income allocations of a globally diversified portfolio. China is a significant and growing portion of the global equity market, representing the second largest nation by GDP output and the third largest country by market capitalization. With the China Select Stock Fund, Vanguard seeks to provide risk-tolerant investors with a targeted approach to exposure in the region. The fund will seek to outperform the MSCI China All Shares Index and have estimated expense ratios of 0.83% for Investor Shares and 0.73% for Admiral Shares, compared with an average expense ratio of 1.14% for competing funds.
The fund will be co-managed by long-tenured Vanguard fund advisors Wellington Management Company LLP and Baillie Gifford Overseas Ltd. Both firms have deep portfolio management experience and expertise in China and a track record of outperformance in Chinese equity markets. Vanguard’s confidence in these firms is underscored by existing and successful partnerships, as well as their track records of delivering value to Vanguard shareholders.
Additional administrative tasks: Financial Page bogleheads.org. blog; finiki the Canadian wiki; The Bogle Center for Financial Literacy site; La Guía Bogleheads® España site.
User avatar
Taylor Larimore
Posts: 32842
Joined: Tue Feb 27, 2007 7:09 pm
Location: Miami FL

Re: Vanguard China Select Stock Fund

Post by Taylor Larimore »

Bogleheads:

Thanks, but I'll pass on the China fund for these reasons:

* Chinese stocks are ALREADY in Vanguard Total Market International Index Fund.

* Fund is managed. The evidence is clear (see SPIVA) that most managed funds underperform most index funds.

* High cost. A minimum of 0.70% a year.

* Strive for "Simplicity"

Best wishes.
Taylor
Jack Bogle's words of wisdom: "Simplicity is the master key to financial success. -- We ignore the real diamonds of simplicity, seeking instead the illusory rhinestones of complexity."
"Simplicity is the master key to financial success." -- Jack Bogle
User avatar
sunnywindy
Posts: 655
Joined: Sat Jan 18, 2014 3:42 pm
Location: Central California

Re: Vanguard China Select Stock Fund

Post by sunnywindy »

I find it strange that Vanguard has a general push to ETFs (for very good reasons) but they are not offering this as an ETF. ??? (As far as I can tell, this is going to be offered to retail investors while the other "Select" funds are only for Personal Advisor Service clients.)
Powered by chocolate!
UpperNwGuy
Posts: 9479
Joined: Sun Oct 08, 2017 7:16 pm

Re: Vanguard China Select Stock Fund

Post by UpperNwGuy »

Yet another new high cost Vanguard fund that is actively managed. What on earth is going on in Malvern, PA? What kinds of customers are they trying to attract? It sure isn't bogleheads.

Meanwhile, I'm one of those bogleheads who seeks to avoid China in his portfolio.
roth evangelist
Posts: 254
Joined: Wed Jul 01, 2020 9:56 pm

Re: Vanguard China Select Stock Fund

Post by roth evangelist »

I wish they could offer an international value factor fund that complements VFVA before their first country-focused fund.
000
Posts: 8211
Joined: Thu Jul 23, 2020 12:04 am

Re: Vanguard China Select Stock Fund

Post by 000 »

sunnywindy wrote: Mon Nov 29, 2021 3:24 pm I find it strange that Vanguard has a general push to ETFs (for very good reasons) but they are not offering this as an ETF. ??? (As far as I can tell, this is going to be offered to retail investors while the other "Select" funds are only for Personal Advisor Service clients.)
I also find this strange. It almost seems like no one is charge of the ship, which is being pulled in multiple directions.
alex_686
Posts: 13320
Joined: Mon Feb 09, 2015 1:39 pm

Re: Vanguard China Select Stock Fund

Post by alex_686 »

000 wrote: Mon Nov 29, 2021 4:51 pm
sunnywindy wrote: Mon Nov 29, 2021 3:24 pm I find it strange that Vanguard has a general push to ETFs (for very good reasons) but they are not offering this as an ETF. ??? (As far as I can tell, this is going to be offered to retail investors while the other "Select" funds are only for Personal Advisor Service clients.)
I also find this strange. It almost seems like no one is charge of the ship, which is being pulled in multiple directions.
I will take a guess.

ETFs tend to require more liquidity than mutual funds. Everything in the basket needs to be bought or sold in short order. Not sure you can do this with China's capital controls.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
alex_686
Posts: 13320
Joined: Mon Feb 09, 2015 1:39 pm

Re: Vanguard China Select Stock Fund

Post by alex_686 »

UpperNwGuy wrote: Mon Nov 29, 2021 3:32 pm Yet another new high cost Vanguard fund that is actively managed. What on earth is going on in Malvern, PA? What kinds of customers are they trying to attract? It sure isn't bogleheads.
Maybe. In order for passive index funds to work you need a efficient market. China's market is distorted by the government priorities. There are also issues with the index.

This is one of the few areas that I would consider an active manager over a passive fund.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
Northern Flicker
Posts: 15363
Joined: Fri Apr 10, 2015 12:29 am

Re: Vanguard China Select Stock Fund

Post by Northern Flicker »

sunnywindy wrote: Mon Nov 29, 2021 3:24 pm I find it strange that Vanguard has a general push to ETFs (for very good reasons) but they are not offering this as an ETF. ??? (As far as I can tell, this is going to be offered to retail investors while the other "Select" funds are only for Personal Advisor Service clients.)
Vanguard does have some factor-based ETFs but no traditional actively managed funds as ETFs.
000
Posts: 8211
Joined: Thu Jul 23, 2020 12:04 am

Re: Vanguard China Select Stock Fund

Post by 000 »

alex_686 wrote: Mon Nov 29, 2021 5:06 pm I will take a guess.

ETFs tend to require more liquidity than mutual funds. Everything in the basket needs to be bought or sold in short order. Not sure you can do this with China's capital controls.
Can't the ETF do in-kind redemptions for APs?

Wouldn't the APs already have to be financial institutions approved for A shares by the CCP?

A more probable reason is Vanguard doesn't want daily disclosures.
Northern Flicker
Posts: 15363
Joined: Fri Apr 10, 2015 12:29 am

Re: Vanguard China Select Stock Fund

Post by Northern Flicker »

It is much more difficult for the AP to arbitrage the NAV and ETF market price when the portfolio is a moving target (ie is actively managed).
radlink54
Posts: 13
Joined: Sun May 23, 2010 5:00 pm

Re: Vanguard China Select Stock Fund

Post by radlink54 »

I find this offering very amusing. I have one half of my holding with Fidelity. The other half I kept with VG because I thought they believed in the Bogle approach, and even if the website brokerage etc is lacking vis a vis Fido or Schwab, I thought they still believed in low cost offerings. But their website sucks, and their web based trading platform is way behind Fido or Schwab.

Over the past 20 years Fido and Schwab have moved to more and more low cost ETF and funds that mirror what "used to be" their VG competition. I can find Fido offerings that equal or surpass VG in low cost index offerings.

Meanwhile VG has continued to offer a less robust online interface. Maybe OK if they stick to their roots. But every new product is a higher cost managed offering that looks like something Fidelity or Schwab could have come up with in the 1990's.

As someone else posted...Bogle would be not be impressed. Maybe it will attract the millennials, but it is making this boomer decide to consolidate with Fido or Schwab.
alex_686
Posts: 13320
Joined: Mon Feb 09, 2015 1:39 pm

Re: Vanguard China Select Stock Fund

Post by alex_686 »

000 wrote: Mon Nov 29, 2021 5:12 pm Can't the ETF do in-kind redemptions for APs?

Wouldn't the APs already have to be financial institutions approved for A shares by the CCP?

A more probable reason is Vanguard doesn't want daily disclosures.
I am not 100% sure on this. I think my answer is more probable. This is based reading the tea leaves on where DAF choses to use mutual funds verse ETFs. I would be happy to hear some concert evidence one way or the other.

How fast can a AP grab the underlying basket of shares and ship them off to the US? How fast can they ship them back and sell them in the open market? What fees are involved?
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
User avatar
nisiprius
Advisory Board
Posts: 52216
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Re: Vanguard China Select Stock Fund

Post by nisiprius »

Mortimer J. Buckley is eroding the Vanguard brand.

Does anybody seriously think Vanguard investors need a China fund to "give them the best chance for investment success?"

How long before the first forum thread on "Why not 100% China Select?"
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
000
Posts: 8211
Joined: Thu Jul 23, 2020 12:04 am

Re: Vanguard China Select Stock Fund

Post by 000 »

alex_686 wrote: Mon Nov 29, 2021 5:25 pm I am not 100% sure on this. I think my answer is more probable. This is based reading the tea leaves on where DAF choses to use mutual funds verse ETFs. I would be happy to hear some concert evidence one way or the other.

How fast can a AP grab the underlying basket of shares and ship them off to the US? How fast can they ship them back and sell them in the open market? What fees are involved?
Well, there are US listed ETFs which include stocks that only trade on Chinese exchanges and they seem to work somehow.
reln
Posts: 718
Joined: Fri Apr 19, 2019 4:01 pm

Re: Vanguard China Select Stock Fund

Post by reln »

Barry Barnitz wrote: Mon Nov 29, 2021 1:49 pm Hi:

Press release: Vanguard Announces Plans to Launch Active China Equity Fund
Vanguard today filed an initial registration statement with the U.S. Securities and Exchange Commission to introduce Vanguard China Select Stock Fund. The fund will invest in both onshore and offshore Chinese equities and is intended for clients seeking actively managed, high-alpha-target equity exposure to complement a broadly diversified portfolio. Vanguard expects to launch the fund in the first quarter of 2022.
Vanguard believes that exposure to China is an important part of both the equity and fixed income allocations of a globally diversified portfolio. China is a significant and growing portion of the global equity market, representing the second largest nation by GDP output and the third largest country by market capitalization. With the China Select Stock Fund, Vanguard seeks to provide risk-tolerant investors with a targeted approach to exposure in the region. The fund will seek to outperform the MSCI China All Shares Index and have estimated expense ratios of 0.83% for Investor Shares and 0.73% for Admiral Shares, compared with an average expense ratio of 1.14% for competing funds.
The fund will be co-managed by long-tenured Vanguard fund advisors Wellington Management Company LLP and Baillie Gifford Overseas Ltd. Both firms have deep portfolio management experience and expertise in China and a track record of outperformance in Chinese equity markets. Vanguard’s confidence in these firms is underscored by existing and successful partnerships, as well as their track records of delivering value to Vanguard shareholders.
Exciting news.
User avatar
sunnywindy
Posts: 655
Joined: Sat Jan 18, 2014 3:42 pm
Location: Central California

Re: Vanguard China Select Stock Fund

Post by sunnywindy »

alex_686 wrote: Mon Nov 29, 2021 5:06 pm
000 wrote: Mon Nov 29, 2021 4:51 pm
sunnywindy wrote: Mon Nov 29, 2021 3:24 pm I find it strange that Vanguard has a general push to ETFs (for very good reasons) but they are not offering this as an ETF. ??? (As far as I can tell, this is going to be offered to retail investors while the other "Select" funds are only for Personal Advisor Service clients.)
I also find this strange. It almost seems like no one is in charge of the ship, which is being pulled in multiple directions.
I will take a guess.

ETFs tend to require more liquidity than mutual funds. Everything in the basket needs to be bought or sold in short order. Not sure you can do this with China's capital controls.
That's a good guess. Probably the "Select" name connotates 35 to 45 holdings and maybe some of those are too illiquid for the ETF structure. I wonder if one of the active non-transparent ETF structures would work? (I know Vanguard would be loath to pay anyone to use their structure, so it probably won't happen.)

This actively managed transparent ETF - Raylient Quantimental China Equity ETF (RAYC) - has about 130 holdings and about the same price as Vanguard. https://funds.rayliant.com/ So far, good performance versus the index.
Powered by chocolate!
Northern Flicker
Posts: 15363
Joined: Fri Apr 10, 2015 12:29 am

Re: Vanguard China Select Stock Fund

Post by Northern Flicker »

nisiprius wrote: Mon Nov 29, 2021 5:30 pm Mortimer J. Buckley is eroding the Vanguard brand.
In 2021, DC retirement plans like 401Ks had 27% of their assets in index funds. I'm pretty sure Vanguard is not one of the market share leaders in the other 73%. I don't see how creating actively managed funds that are cheaper than those of their competition erodes the brand.
Last edited by Northern Flicker on Tue Nov 30, 2021 12:54 am, edited 1 time in total.
000
Posts: 8211
Joined: Thu Jul 23, 2020 12:04 am

Re: Vanguard China Select Stock Fund

Post by 000 »

I also have to wonder what kind of investor would use this fund instead of the existing Vanguard Emerging Markets Select Stock Fund (VMMSX, 0.85% ER, 301 stocks), which includes Wellington Management Company LLP and Baillie Gifford Overseas Ltd. as two of its four manager firms.

I guess it allows investors to select their level of China exposure? In that case Vanguard might want to consider adding an ex-China EM fund, as both EMXC and XCEM use a different EM index than Vanguard which has some overlap with DM (notably, South Korea).
Ferdinand2014
Posts: 2390
Joined: Mon Dec 17, 2018 5:49 pm

Re: Vanguard China Select Stock Fund

Post by Ferdinand2014 »

Hard pass. I’ve somehow managed to meet all of my investment goals without high fees, active management or investments in China.
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett
Dave55
Posts: 2018
Joined: Tue Sep 03, 2013 2:51 pm

Re: Vanguard China Select Stock Fund

Post by Dave55 »

It is possible that Vanguard is evolving, changing and adapting to what it perceives to be its future, offering low cost index and low cost managed funds, so what is the big deal? It's also about gathering AUM, so throw a big net out to bring in the $$.

Dave
"Reality always wins, your only job is to get in touch with it." Wilfred Bion
TurtleBeatsHare
Posts: 121
Joined: Fri Jun 25, 2021 2:01 pm

Re: Vanguard China Select Stock Fund

Post by TurtleBeatsHare »

I’d like to know the share types and exchanges on which this fund will invest and whether they will be given special dispensation from the Chinese government to invest in certain types of equity for which foreign entities requires special permission. The Chinese market is significantly underweighted in more or less all indices because of the presence of SOEs, limitations on foreign purchasing of certain share types, or limitations on foreign ownership interest to a certain percentage of equity or the indices have internal limitations to only trading on certain types of exchanges, like Hong Kong vs Shanghai or Beijing or Shenzhen. Considering GDP and these restrictions, the world is highly underweight on China (or not, depending on one’s theory of what an appropriate weight is).
User avatar
Cheez-It Guy
Posts: 4007
Joined: Sun Mar 03, 2019 3:20 pm

Re: Vanguard China Select Stock Fund

Post by Cheez-It Guy »

Personally, I have less than zero interest in this, but it doesn't exactly make me mad that they choose to offer it. Do Bogleheads want Vanguard to offer exclusively 4 total market index funds? Everything they either do or don't do seems to infuriate someone these days. I don't get it. Bogleheads are seeking out the headlines no matter how obscure and stirring the pot. Then we make the logical leap that because they announce they will offer it, they'll be strongly pushing John and Jane Q. Investor into it. If you didn't realize, Vanguard is also a brokerage (some/many might say a crappy one), so in that sense, they "offer" almost everything that's investable already. Well, except leveraged ETFs and crypto, and that fact also infuriates a subset on the boards who think Vanguard is a nanny state. But if they did offer, it would upset another subset. I need to start keeping track of how many times someone makes a reference to what Jack Bogle would think or even say he's rolling over in his grave. Both are an appeal to (deceased) authority. Tacky!
User avatar
Sandtrap
Posts: 19591
Joined: Sat Nov 26, 2016 5:32 pm
Location: Hawaii No Ka Oi - white sandy beaches, N. Arizona 1 mile high.

Re: Vanguard China Select Stock Fund

Post by Sandtrap »

Taylor Larimore wrote: Mon Nov 29, 2021 2:38 pm Bogleheads:

Thanks, but I'll pass on the China fund for these reasons:

* Chinese stocks are ALREADY in Vanguard Total Market International Index Fund.

* Fund is managed. The evidence is clear (see SPIVA) that most managed funds underperform most index funds.

* High cost. A minimum of 0.70% a year.

* Strive for "Simplicity"

Best wishes.
Taylor
Jack Bogle's words of wisdom: "Simplicity is the master key to financial success. -- We ignore the real diamonds of simplicity, seeking instead the illusory rhinestones of complexity."
Well said.
Great points.

This is one of those posts and quotes that should be printed out and taped to the office or bathroom door.
j :D
Wiki Bogleheads Wiki: Everything You Need to Know
stan1
Posts: 14246
Joined: Mon Oct 08, 2007 4:35 pm

Re: Vanguard China Select Stock Fund

Post by stan1 »

000 wrote: Mon Nov 29, 2021 6:38 pm I also have to wonder what kind of investor would use this fund instead of the existing Vanguard Emerging Markets Select Stock Fund (VMMSX, 0.85% ER, 301 stocks), which includes Wellington Management Company LLP and Baillie Gifford Overseas Ltd. as two of its four manager firms.

I guess it allows investors to select their level of China exposure? In that case Vanguard might want to consider adding an ex-China EM fund, as both EMXC and XCEM use a different EM index than Vanguard which has some overlap with DM (notably, South Korea).
I just thought the same thing, could Vanguard add the China Select fund and then subsequently change the investment objective of VMMSX to be ex-China EM? Vanguard is presumably responding to some perceived customer demand. Seems like at least right now there is more demand for ex China than China. With "only" $974M in assets Vanguard can't be ecstatic about VMMSX.

As for high ER EM funds go, if these funds help attract assets to Vanguard that generate revenue to pay the costs of the free brokerage service I use I'm OK with that. At some point people take personal accountability for their decisions. Relative low cost active funds have had a place on equal footing with index funds at Vanguard since the beginning when Wellington was brought in. If someone wants to make the choice to invest in an active EM fund the 0.85% ER funds at Vanguard are much less expensive than competing EM active funds.
000
Posts: 8211
Joined: Thu Jul 23, 2020 12:04 am

Re: Vanguard China Select Stock Fund

Post by 000 »

stan1 wrote: Mon Nov 29, 2021 9:05 pm I just thought the same thing, could Vanguard add the China Select fund and then subsequently change the investment objective of VMMSX to be ex-China EM? Vanguard is presumably responding to some perceived customer demand. Seems like at least right now there is more demand for ex China than China. With "only" $974M in assets Vanguard can't be ecstatic about VMMSX.
I can definitely see that happening.

Also curious that they already have admiral shares planned for this new China fund, but there are none for VMMSX.

Just speculating, but maybe they're going to include it in some fund-of-funds or a model portfolio so they anticipate more demand? :confused
talzara
Posts: 4745
Joined: Thu Feb 12, 2009 6:40 pm

Re: Vanguard China Select Stock Fund

Post by talzara »

sunnywindy wrote: Mon Nov 29, 2021 3:24 pm I find it strange that Vanguard has a general push to ETFs (for very good reasons) but they are not offering this as an ETF. ??? (As far as I can tell, this is going to be offered to retail investors while the other "Select" funds are only for Personal Advisor Service clients.)
Northern Flicker wrote: Mon Nov 29, 2021 5:10 pm Vanguard does have some factor-based ETFs but no traditional actively managed funds as ETFs.
Here's the list of all Vanguard ETFs: https://investor.vanguard.com/etf/list#/

Even the expensive ETFs have much lower expense ratios, and they're not actively managed:
  • International High Dividend Yield (0.28%) is based on a FTSE index.
  • Emerging Markets Government Bond (0.25%) is based on a Bloomberg index.
  • U.S. Multifactor (0.19%) comes close to being actively-managed, but it is a quantitative fund. A computer model selects the investments.
All of these have expense ratios much lower than China Select Stock's 0.70%.
talzara
Posts: 4745
Joined: Thu Feb 12, 2009 6:40 pm

Re: Vanguard China Select Stock Fund

Post by talzara »

TurtleBeatsHare wrote: Mon Nov 29, 2021 7:03 pm I’d like to know the share types and exchanges on which this fund will invest and whether they will be given special dispensation from the Chinese government to invest in certain types of equity for which foreign entities requires special permission. The Chinese market is significantly underweighted in more or less all indices because of the presence of SOEs, limitations on foreign purchasing of certain share types, or limitations on foreign ownership interest to a certain percentage of equity or the indices have internal limitations to only trading on certain types of exchanges, like Hong Kong vs Shanghai or Beijing or Shenzhen. Considering GDP and these restrictions, the world is highly underweight on China (or not, depending on one’s theory of what an appropriate weight is).
You can't weight by GDP even if you wanted to. Germany is also underweight, but how would you buy the rest of Germany's GDP? Most of the German Mittelstand companies are family-owned.

Germany is 4.5% of gross world product but only 2.4% of Vanguard Total World Index.

China is 17% of gross world product but only 4.4% of Vanguard Total World Index.

The United States is 25% of gross world product but 57.2% of Vanguard Total World Index.
Northern Flicker
Posts: 15363
Joined: Fri Apr 10, 2015 12:29 am

Re: Vanguard China Select Stock Fund

Post by Northern Flicker »

talzara wrote: Tue Nov 30, 2021 3:53 pm
sunnywindy wrote: Mon Nov 29, 2021 3:24 pm I find it strange that Vanguard has a general push to ETFs (for very good reasons) but they are not offering this as an ETF. ??? (As far as I can tell, this is going to be offered to retail investors while the other "Select" funds are only for Personal Advisor Service clients.)
Northern Flicker wrote: Mon Nov 29, 2021 5:10 pm Vanguard does have some factor-based ETFs but no traditional actively managed funds as ETFs.
Here's the list of all Vanguard ETFs: https://investor.vanguard.com/etf/list#/

Even the expensive ETFs have much lower expense ratios, and they're not actively managed:
  • International High Dividend Yield (0.28%) is based on a FTSE index.
  • Emerging Markets Government Bond (0.25%) is based on a Bloomberg index.
  • U.S. Multifactor (0.19%) comes close to being actively-managed, but it is a quantitative fund. A computer model selects the investments.
All of these have expense ratios much lower than China Select Stock's 0.70%.
Yes. My point was just that Vanguard does not have actively managed ETFs, which you reiterated. Traditional active management is more expensive than running an index fund or quantitative factor-based fund.

The new China fund does not interest me in any case. It clearly is intended to compete with other actively managed Chinese equity funds. Fidelity's offering has an ER of 0.93%.
Last edited by Northern Flicker on Tue Nov 30, 2021 4:07 pm, edited 1 time in total.
User avatar
LadyGeek
Site Admin
Posts: 95696
Joined: Sat Dec 20, 2008 4:34 pm
Location: Philadelphia
Contact:

Re: Vanguard China Select Stock Fund

Post by LadyGeek »

This is a "No politics" forum. I removed an off-topic post. As a reminder, see: Politics and Religion
In order to avoid the inevitable frictions that arise from these topics, political or religious posts and comments are prohibited. The only exceptions to this rule are:
  • Common religious expressions such as sending your prayers to an ailing member.
  • Usage of factual and non-derogatory political labels when necessary to the discussion at hand.
  • Discussions about enacted laws or regulations that affect the individual investor. Note that discussions of proposed legislation are prohibited.
  • Proposed regulations that are directly related to investing may be discussed if and when they are published for public comments.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
TurtleBeatsHare
Posts: 121
Joined: Fri Jun 25, 2021 2:01 pm

Re: Vanguard China Select Stock Fund

Post by TurtleBeatsHare »

talzara wrote: Tue Nov 30, 2021 3:54 pm
TurtleBeatsHare wrote: Mon Nov 29, 2021 7:03 pm I’d like to know the share types and exchanges on which this fund will invest and whether they will be given special dispensation from the Chinese government to invest in certain types of equity for which foreign entities requires special permission. The Chinese market is significantly underweighted in more or less all indices because of the presence of SOEs, limitations on foreign purchasing of certain share types, or limitations on foreign ownership interest to a certain percentage of equity or the indices have internal limitations to only trading on certain types of exchanges, like Hong Kong vs Shanghai or Beijing or Shenzhen. Considering GDP and these restrictions, the world is highly underweight on China (or not, depending on one’s theory of what an appropriate weight is).
You can't weight by GDP even if you wanted to. Germany is also underweight, but how would you buy the rest of Germany's GDP? Most of the German Mittelstand companies are family-owned.

Germany is 4.5% of gross world product but only 2.4% of Vanguard Total World Index.

China is 17% of gross world product but only 4.4% of Vanguard Total World Index.

The United States is 25% of gross world product but 57.2% of Vanguard Total World Index.
Conceivably, you could overpurchase a particular index. For example, if Germany was 5% of global GDP but 2.5% of global equity, you could buy a German-specific index at 2x. Now, that would overweight the individual companies and would not buy exposure to the portion of German GDP not represented in equity markets, but it might solve problems associated with underexposure to Germany-wide factors, like central bank policy (to the extent this is still directed at the national and not EU level). But it would create risks associated with over exposure to particular companies and might not even solve the underexposure to Germany to the extent that German companies depend upon performance outside of Germany. I’m not recommending this; just mentioning it as an idea.

In the context of China, however, it’s sometimes the case that large portions of their GDP are not captured by equity markets (eg state owned enterprises) or companies that fund through bank loans vs equity investment (a far more common practice in China). However, there are substantial portions of Chinese GDP that are represented by equity—but either have semi-waivable restrictions on foreign ownership or limitations on foreign ownership percentage or are only traded on certain exchanges. I’d have to double check since I last looked at this, but my impression was that most indices tracked the H shares sold in Hong Kong and that inclusion of B shares and A shares (traded on mainland exchanges) was spottier. To even buy an A share, an investor has to be QII (Qualified Inst Investor) and even then, iirc, there were percentage limitations. B shares were more widely available to foreign investment, but again the fund had to be willing to operate in the mainland exchanges. China recently amended their foreign investing law, and so I don’t know the exact lay of the land now. My point, however, is that there is a portion (likely substantial) portion of China’s GDP that is represented in equity markets and yet isn’t well captured in some indices. So I’d be interested in knowing whether this actively managed fund will be capable of solving the underweighting problem that used to (and I suspect still does) exist in the all world or ex US indices at Vanguard. That might be worth paying a higher fee.

Finally, your GDP figures are arguably off for China and US because you don’t appear to be adjusting for Chinese currency manipulation. If you adjust using PPP methods, China’s GDP is as large as (and likely exceeds) US GDP.
User avatar
asset_chaos
Posts: 2629
Joined: Tue Feb 27, 2007 5:13 pm
Location: Melbourne

Re: Vanguard China Select Stock Fund

Post by asset_chaos »

Was Burton Malkiel reappointed to Vanguard's board? Investors Need To Own More China, says Malkiel. As he's been beating the drum that investors are underweight China for a while, Malkiel might like this fund.

For myself, however much of Chinese companies are in total world is plenty for me. Broadest reasonable diversification at lowest feasible cost is the select investment strategy for me.
Regards, | | Guy
User avatar
nisiprius
Advisory Board
Posts: 52216
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Re: Vanguard China Select Stock Fund

Post by nisiprius »

asset_chaos wrote: Tue Nov 30, 2021 11:38 pm Was Burton Malkiel reappointed to Vanguard's board? Investors Need To Own More China, says Malkiel. As he's been beating the drum that investors are underweight China for a while, Malkiel might like this fund...
Indeed. Back in 2007...

Image
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
User avatar
nisiprius
Advisory Board
Posts: 52216
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Re: Vanguard China Select Stock Fund

Post by nisiprius »

What's disturbing to me about Vanguard's new China fund it is that it seems so trendy or gimmicky or something.

It seems like chasing headlines.

I'm imagining a conference room, "China's in the news all the time, I betcha we are getting lots of calls from people asking about China. Everyone's got an opinion about China. Pro or con, they're engaged. Either they want to invest in China or they want to avoid investing in China. I couldn't care less which side we take, a China fund, an ex-China fund, hey maybe both, but let's do something with China."

I just can't imagine someone saying "To take a stand for all investors, to treat them fairly, and to give them the best chance for investment success, right? Well, how can they possibly get the best chance for investment success if we don't give them an actively managed China fund?"

Vanguard has funds for every one of the nine style boxes, and funds for every one of the eleven sectors.

Now if they had said "to complement our single-country US funds, we are announcing a new line of thirteen single-country index funds covering every country that has more than 1% of global market cap," I would have said "not my thing, but at least I get it." Serve the Canadians with a Canada fund, etc.

Or if it had at least been an index fund, FTSE has plenty of FTSE's China indexes--I'm too ignorant to know which is the obvious one.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
User avatar
sunnywindy
Posts: 655
Joined: Sat Jan 18, 2014 3:42 pm
Location: Central California

Re: Vanguard China Select Stock Fund

Post by sunnywindy »

Wall Street's DNA is to be a new product machine, whether or not new funds are needed. The China Fund might be an indication Vanguard is gravitating this way. (But, you can easily make the argument that China is the second-largest economy in the world and Vanguard needed to have a product for that very reason.)

Why might this have happened? I think it is as simple as the index fund division is Hoovering up gigantic sums of money and is largely on auto-pilot. The other active funds are doing well also, in terms of asset gathering and performance. So, what's a company or Board of Directors to do? Create something new - this always happens when a company is doing well they go for overreach instead of just staying put.

While I think Wellington and Baille-Gifford are excellent sub-advisors, I'd rather buy a China Fund from specialists like Mathews Asia or Ralient before I would go for Vanguard.
Powered by chocolate!
User avatar
nisiprius
Advisory Board
Posts: 52216
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Re: Vanguard China Select Stock Fund

Post by nisiprius »

sunnywindy wrote: Wed Dec 01, 2021 7:02 am...While I think Wellington and Baille-Gifford are excellent sub-advisors, I'd rather buy a China Fund from specialists like Mathews Asia or Ralient before I would go for Vanguard...
And Fidelity's had a China (Region) Fund since 1996. Which has done respectably against the Matthews Asia China fund. And iShares has a China index fund, MCHI, which has beaten the Matthews Asia China fund since inception in 2012.

What, exactly, is Vanguard bringing to the table?
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
Parkinglotracer
Posts: 3949
Joined: Fri Dec 20, 2019 2:49 am
Location: Upstate NY

Re: Vanguard China Select Stock Fund

Post by Parkinglotracer »

As we know, China is not a free country nor has a transparent financial market. I am willing to take risks in my financial portfolio but why would I want to invest in a country where my assets could be taken or squashed at a moment’s notice? Please help me understand what I am missing and how the rewards are more than the risks.
manuvns
Posts: 1465
Joined: Wed Jan 02, 2008 1:30 pm

Re: Vanguard China Select Stock Fund

Post by manuvns »

the risk in chinese stocks are priced in at this moment , it's a good time to invest in chinese assets especially china tech
Thanks!
User avatar
sunnywindy
Posts: 655
Joined: Sat Jan 18, 2014 3:42 pm
Location: Central California

Re: Vanguard China Select Stock Fund

Post by sunnywindy »

nisiprius wrote: Wed Dec 01, 2021 7:49 am
sunnywindy wrote: Wed Dec 01, 2021 7:02 am...While I think Wellington and Baille-Gifford are excellent sub-advisors, I'd rather buy a China Fund from specialists like Mathews Asia or Ralient before I would go for Vanguard...
And Fidelity's had a China (Region) Fund since 1996. Which has done respectably against the Matthews Asia China fund. And iShares has a China index fund, MCHI, which has beaten the Matthews Asia China fund since inception in 2012.

What, exactly, is Vanguard bringing to the table?
When the Vanguard Factor ETFs came out, they were marketed to institutions & advisors and were deliberately missing from the "Personal Investors" website. It will be telling if Vanguard markets the China fund similarly.

Your question might be rhetorical, but I agree that Vanguard does not bring anything to the table with this fund (and I'm sure they convinced themselves otherwise). Didn't Vanguard just punt on a potential big push to be in China? https://www.cnbc.com/2021/03/16/vanguar ... arket.html

Lastly, Vanguard was and is the greatest disruptor in Wall Street history (or at least since the advent of the mutual fund) with low costs and indexing. They have won the AUM and philosophical battle. I see a company that is trying to innovate and stay relevant by applying its low-cost model to other investment areas, but the jury is still out whether or not they will be successful or if customers are asking for this.
Powered by chocolate!
alex_686
Posts: 13320
Joined: Mon Feb 09, 2015 1:39 pm

Re: Vanguard China Select Stock Fund

Post by alex_686 »

nisiprius wrote: Wed Dec 01, 2021 6:21 am What's disturbing to me about Vanguard's new China fund it is that it seems so trendy or gimmicky or something.

It seems like chasing headlines.
China was "trendy" 20 years ago.
nisiprius wrote: Wed Dec 01, 2021 6:21 am I'm imagining a conference room, "China's in the news all the time, I betcha we are getting lots of calls from people asking about China. Everyone's got an opinion about China. Pro or con, they're engaged. Either they want to invest in China or they want to avoid investing in China. I couldn't care less which side we take, a China fund, an ex-China fund, hey maybe both, but let's do something with China."

I just can't imagine someone saying "To take a stand for all investors, to treat them fairly, and to give them the best chance for investment success, right? Well, how can they possibly get the best chance for investment success if we don't give them an actively managed China fund?"
I will take the other side. Shouldn't Vanguard listen to its clients? Maybe some investors know what they need better than Vanguard?

This is a pretty standard asset class. Not for everybody but there is still a decent demand for it. There are logical reasons for Vanguard to enter. Either they enter and develop economies of scale or they wither away in this asset class, resulting in higher expenses for their more general world funds.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
Northern Flicker
Posts: 15363
Joined: Fri Apr 10, 2015 12:29 am

Re: Vanguard China Select Stock Fund

Post by Northern Flicker »

nisiprius wrote: Wed Dec 01, 2021 7:49 am
sunnywindy wrote: Wed Dec 01, 2021 7:02 am...While I think Wellington and Baille-Gifford are excellent sub-advisors, I'd rather buy a China Fund from specialists like Mathews Asia or Ralient before I would go for Vanguard...
And Fidelity's had a China (Region) Fund since 1996. Which has done respectably against the Matthews Asia China fund. And iShares has a China index fund, MCHI, which has beaten the Matthews Asia China fund since inception in 2012.

What, exactly, is Vanguard bringing to the table?
Fidelity China fund FHKCX ER is 0.93%
Matthews China fund MCHFX ER is 1.08%
Vanguard China Select ER will be 0.7%

Vanguard active funds are consistently 20-30 bp/year cheaper than similar funds at Fidelity or T Rowe Price.

If it is inappropriate to have a fund dedicated to equities of the world's 2nd largest economy, does that mean that US equity funds should be eliminated if and when China's GDP surpasses that of the US?
talzara
Posts: 4745
Joined: Thu Feb 12, 2009 6:40 pm

Re: Vanguard China Select Stock Fund

Post by talzara »

TurtleBeatsHare wrote: Tue Nov 30, 2021 6:55 pm I’d have to double check since I last looked at this, but my impression was that most indices tracked the H shares sold in Hong Kong and that inclusion of B shares and A shares (traded on mainland exchanges) was spottier. To even buy an A share, an investor has to be QII (Qualified Inst Investor) and even then, iirc, there were percentage limitations.
The Vanguard Emerging Markets Index Fund tracks the FTSE A share inclusion index. Vanguard has one of the largest Chinese investment quotas of any foreign asset manager.
TurtleBeatsHare wrote: Tue Nov 30, 2021 6:55 pm Finally, your GDP figures are arguably off for China and US because you don’t appear to be adjusting for Chinese currency manipulation. If you adjust using PPP methods, China’s GDP is as large as (and likely exceeds) US GDP.
First, you can't buy stocks in PPP. You have to exchange currency at the market rates.

Second, if you want to weight GDP at PPP, then you'd also have to weight the market cap at PPP, so the relative underweighting would be the same.

Finally, there is no significant Chinese currency manipulation. The International Monetary Fund has been saying for six years that the Chinese renminbi is at fair value. PPP is higher because of non-tradable goods like haircuts and Big Macs, which do not affect exchange rates.
The IMF is close to declaring China's yuan fairly valued for the first time in more than a decade

May 3, 2015
https://www.wsj.com/articles/imf-to-bri ... 1430697814
The Chinese yuan is still "fairly valued" despite recent declines against the dollar, said an International Monetary Fund (IMF) official on Friday.

July 27, 2017
https://www.cnbc.com/2018/07/27/the-chi ... chief.html
At the moment, China does not meet the US Treasury’s criteria for being considered a currency manipulator, since it has only a small account surplus as a share of its GDP and has not intervened directly in the currency markets for years. In addition, the International Monetary Fund (IMF) regards the yuan as fairly valued.

However, the Treasury labelled China a currency manipulator in August last year even though it did not meet all its criteria at the time.

July 27, 2020
https://www.scmp.com/economy/china-econ ... ed-why-are
Last edited by talzara on Thu Dec 02, 2021 1:06 pm, edited 1 time in total.
MaxDOL
Posts: 57
Joined: Thu Jan 31, 2019 1:42 am

Re: Vanguard China Select Stock Fund

Post by MaxDOL »

nisiprius wrote: Wed Dec 01, 2021 7:49 am
sunnywindy wrote: Wed Dec 01, 2021 7:02 am...While I think Wellington and Baille-Gifford are excellent sub-advisors, I'd rather buy a China Fund from specialists like Mathews Asia or Ralient before I would go for Vanguard...
And Fidelity's had a China (Region) Fund since 1996. Which has done respectably against the Matthews Asia China fund. And iShares has a China index fund, MCHI, which has beaten the Matthews Asia China fund since inception in 2012.

What, exactly, is Vanguard bringing to the table?
Well...Baillie Gifford has well track record when in come to active investing in China.
Baillie Gifford China Growth Trust PLC/BGCG which is a closed end trust that trade on London stock exchange had been beaten MCHI/Ishares MSCI China ETF since MCHI inception.
SINCE April 01,2011 to December 01,2021
BGCG total return 137.29% / 8.43% CAGR
MCHI total return 49.90% / 3.86 CAGR

Image
Caduceus
Posts: 3527
Joined: Mon Sep 17, 2012 1:47 am

Re: Vanguard China Select Stock Fund

Post by Caduceus »

Parkinglotracer wrote: Wed Dec 01, 2021 7:53 am As we know, China is not a free country nor has a transparent financial market. I am willing to take risks in my financial portfolio but why would I want to invest in a country where my assets could be taken or squashed at a moment’s notice? Please help me understand what I am missing and how the rewards are more than the risks.
The risk and reward can be asymmetric. A good part of my portfolio net worth is comprised of relatively small bets that worked out insanely well. At one point, I put 8% of my portfolio into one stock (the stock itself plus some call options), and that went up so high that at the point I exited the position it amounted to slightly less than a third of my total investable net worth.

I think about some Chinese stocks in that way now. I think there is a non-zero chance you can lose everything, so there's no way that it would be responsible to invest a significant portion of your net worth in it. But at some low enough price relative to your estimate of business value, the value proposition is quite tempting, even with the known political risks.
Parkinglotracer
Posts: 3949
Joined: Fri Dec 20, 2019 2:49 am
Location: Upstate NY

Re: Vanguard China Select Stock Fund

Post by Parkinglotracer »

Caduceus wrote: Thu Dec 02, 2021 1:36 am
Parkinglotracer wrote: Wed Dec 01, 2021 7:53 am As we know, China is not a free country nor has a transparent financial market. I am willing to take risks in my financial portfolio but why would I want to invest in a country where my assets could be taken or squashed at a moment’s notice? Please help me understand what I am missing and how the rewards are more than the risks.
The risk and reward can be asymmetric. A good part of my portfolio net worth is comprised of relatively small bets that worked out insanely well. At one point, I put 8% of my portfolio into one stock (the stock itself plus some call options), and that went up so high that at the point I exited the position it amounted to slightly less than a third of my total investable net worth.

I think about some Chinese stocks in that way now. I think there is a non-zero chance you can lose everything, so there's no way that it would be responsible to invest a significant portion of your net worth in it. But at some low enough price relative to your estimate of business value, the value proposition is quite tempting, even with the known political risks.

I get it … at some price anything is worth investing in. Sounds like you have a strong business background and acumen on values to do better than the average investor at knowing when to invest.

I have 22 years traveling the world in the military and have a decent understanding of the political risks. I have 15 years in domestic and international business development with a major US defense contractor doing business in Taiwan, Korea, and Malaysia among others in the Middle East. Our company would only do Foreign Military Sales (US Gov is involved in Sale) in places where the Direct Commercial Sales path was risky for political or financial reasons. W/ FMS sales Nations were required to actually deposit funds with US Gov so it de risked our changing of political tides and payment. So clearly my international business lense is a bit risk adverse.

I do have about 10% of my portfolio in individual stocks like NVDA, UBiquiti, V, LULU, JNJ, GOOG, TGT, PayPal. etc so I am not adverse to making a ‘educated investment’ but I have kept my serious money in Index ETFs.

If you have any good suggestions on Chinese stocks / investments to consider owning (or domestic ones for that matter) where the reward may outweigh the risk let me know and I will add them to my research list for investment. While we can’t predict the future, I use NAIC and betterinvesting.org green sheets that were made popular with investment clubs for historical data research.
Caduceus
Posts: 3527
Joined: Mon Sep 17, 2012 1:47 am

Re: Vanguard China Select Stock Fund

Post by Caduceus »

Parkinglotracer wrote: Thu Dec 02, 2021 4:17 am
If you have any good suggestions on Chinese stocks / investments to consider owning (or domestic ones for that matter) where the reward may outweigh the risk let me know and I will add them to my research list for investment. While we can’t predict the future, I use NAIC and betterinvesting.org green sheets that were made popular with investment clubs for historical data research.
I've written in other posts that I have some money invested in Alibaba, and I've explained why. But I would never "recommend" that stock to anyone, because I think it fails the definition of an "investment" in the sense that Ben Graham defined it. Ben Graham defined investment - as opposed to speculation - as an enterprise in which there would be no/little risk of permanent impairment of capital. I think Alibaba fails that test. You can think of a number of situations in which you could lose all or substantial amounts of your invested money in Alibaba. Alibaba also fails the test of being an "investment" in the sense that you cannot have a "margin of safety" the way that value investors describe it. You can be right about Alibaba's value, and it would not matter because your wealth can be effectively confiscated by a foreign government.

I'm tempted only because there is no reasonable valuation framework under which Alibaba is worth only $130 per share, if not for the political risks. It is like Amazon, except Alibaba captures something like 25% of disposable income spending while Amazon captures something like 6% of it. It is like Paypal, except it operates in a country with not as strong of a credit card culture, so it's really also like Visa/Mastercard, and together with Tencent, one of two companies that dominates the payments landscape. I mean, when you do a sum-of-its-parts analysis, and you subtract its cash on hand (less debt) from its market cap, subtract the fair value of its investments in associates, its marketable securities, you're getting the underlying businesses - and those are some quite strong businesses indeed - for a fairly insane price.

But again, like Ben Graham would say, it's not an "investment" for the reason stated above.
User avatar
WoodSpinner
Posts: 3505
Joined: Mon Feb 27, 2017 12:15 pm

Re: Vanguard China Select Stock Fund

Post by WoodSpinner »

Sandtrap wrote: Mon Nov 29, 2021 7:44 pm
Taylor Larimore wrote: Mon Nov 29, 2021 2:38 pm Bogleheads:

Thanks, but I'll pass on the China fund for these reasons:

* Chinese stocks are ALREADY in Vanguard Total Market International Index Fund.

* Fund is managed. The evidence is clear (see SPIVA) that most managed funds underperform most index funds.

* High cost. A minimum of 0.70% a year.

* Strive for "Simplicity"

Best wishes.
Taylor
Jack Bogle's words of wisdom: "Simplicity is the master key to financial success. -- We ignore the real diamonds of simplicity, seeking instead the illusory rhinestones of complexity."
Well said.
Great points.

This is one of those posts and quotes that should be printed out and taped to the office or bathroom door.
j :D
Only in this case, the China Shares on the US market are very different from the ones available in China (not sure what this fund wil be able to purchase).

A number of China Portfolio Managers claim that the US listed companies are far more risky (due to LESS oversight) than the ones on the China exchange.

https://www.morningstar.com/podcasts/the-long-view/106 (John Hsu interview on Morningstar).

In addition, the SPIVA records don’t reflect the reality of the Retail Investor, Non-Efficient China Stock market.

That said, I have decided on Simplicity and will pass on the Vanguard fund but truth be told, I was even more tempted by John Hsu’s fund, RAYC.

https://funds.rayliant.com/

WoodSpinner
WoodSpinner
User avatar
Sandtrap
Posts: 19591
Joined: Sat Nov 26, 2016 5:32 pm
Location: Hawaii No Ka Oi - white sandy beaches, N. Arizona 1 mile high.

Re: Vanguard China Select Stock Fund

Post by Sandtrap »

WoodSpinner wrote: Thu Dec 02, 2021 8:48 am
Sandtrap wrote: Mon Nov 29, 2021 7:44 pm
Taylor Larimore wrote: Mon Nov 29, 2021 2:38 pm Bogleheads:

Thanks, but I'll pass on the China fund for these reasons:

* Chinese stocks are ALREADY in Vanguard Total Market International Index Fund.

* Fund is managed. The evidence is clear (see SPIVA) that most managed funds underperform most index funds.

* High cost. A minimum of 0.70% a year.

* Strive for "Simplicity"

Best wishes.
Taylor
Jack Bogle's words of wisdom: "Simplicity is the master key to financial success. -- We ignore the real diamonds of simplicity, seeking instead the illusory rhinestones of complexity."
Well said.
Great points.

This is one of those posts and quotes that should be printed out and taped to the office or bathroom door.
j :D
Only in this case, the China Shares on the US market are very different from the ones available in China (not sure what this fund wil be able to purchase).

A number of China Portfolio Managers claim that the US listed companies are far more risky (due to LESS oversight) than the ones on the China exchange.

https://www.morningstar.com/podcasts/the-long-view/106 (John Hsu interview on Morningstar).

In addition, the SPIVA records don’t reflect the reality of the Retail Investor, Non-Efficient China Stock market.

That said, I have decided on Simplicity and will pass on the Vanguard fund but truth be told, I was even more tempted by John Hsu’s fund, RAYC.

https://funds.rayliant.com/

WoodSpinner
Don’t you think there’s going to be a certain amount of bias from “Jason Hsu” given his position in the mix?

j🌺
Wiki Bogleheads Wiki: Everything You Need to Know
Elysium
Posts: 4120
Joined: Mon Apr 02, 2007 6:22 pm

Re: Vanguard China Select Stock Fund

Post by Elysium »

The two sub-advisors listed on the fund are already making big bets on China on their other more broader international funds, Baille Gifford with Intl Growth and Wellington with Intl Core has 17% and 11% of those funds invested in China, already a top/top 2 country allocation for them. So, it seems they are already betting on China and now given a full country focused fund. Clearly, Vanguard wants to get in with others like Fidelity, although begs the question why not index funds offering single country exposures.
alex_686
Posts: 13320
Joined: Mon Feb 09, 2015 1:39 pm

Re: Vanguard China Select Stock Fund

Post by alex_686 »

WoodSpinner wrote: Thu Dec 02, 2021 8:48 am Only in this case, the China Shares on the US market are very different from the ones available in China (not sure what this fund wil be able to purchase).
I am not going to quote your full post. I think you are half right and half wrong.

I think there are some companies, particularly multinational companies, that are headquarter in China that are equivalent to their DM counterparts in terms of disclosure, minority shareholder rights, etc. There are others that are not.

I think that the proxies you have listed are of poor quality. I can find both good and poor companies that fit the examples you give. Hence my earlier remark that China is one of those rare markets where I would consider an active manager. You need a professional to review each company to figure out what is happening.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
Post Reply