Finally! Vanguard Hong Kong has launched three brand new ETFs listed on the Hong Kong stock exchange.
For those who have read my previous entries, such as getting started investing in Singapore and the guide to Singaporean ETFs know that I really like low cost index funds and investors now have three brand new choices available in Hong Kong.
As there is no withholding tax on dividends received from Hong Kong listed stocks and funds investing in Hong Kong ETFs is not a bad idea, the only issue being conversion cost to HKD as well as general exchange rate risk.
I have already bought 2,800 units of Vanguard’s FTSE Asia ex Japan Index ETF which passively tracks the biggest stocks from China, Hong Kong, India, Indonesia, South Korea, Malaysia, Pakistan, Philippines, Singapore, Taiwan and Thailand.
Vanguard now offers 4 ETFs in Hong Kong:
| Name of ETF | HKEX Ticker | Bloomberg Ticker | What are you buying? | Expense ratio | Distributions | Website |
|---|---|---|---|---|---|---|
| FTSE Japan Index ETF | 3126 | 3126:HK | The FTSE Japan stock index | 0.25% | Quarterly | link |
| FTSE Asia ex Japan High Dividend Yield Index ETF | 3085 | 3085:HK | The FTSE Asia Pacific ex Japan, Australia, New Zealand High Dividend Yield Index which covers companies with higher-than-average dividend yields | 0.45% | Quarterly | link |
| FTSE Developed Europe Index ETF | 3101 | 3101:HK | Index of large and mid cap stocks from developed European countries (UK, France, Germany, Switzerland and Spain being the 5 biggest) | 0.25% | Quarterly | link |
| FTSE Asia ex Japan Index ETF | 2805 | 2805:HK | Over 700 largest stocks from China, Hong Kong, India, Indonesia, South Korea, Malaysia, Pakistan, Philippines, Singapore, Taiwan and Thailand | 0.38% | Quarterly | link |
These funds look extremely attractive. Issued by a strong market leading company, Vanguard and with very low fees. Investors looking for cheap and broad exposure to the markets of developed Europe can now buy the FTSE Developed Europe Index ETF while dividend lovers like myself can turn to the FTSE Asia ex Japan High Dividend Yield Index ETF.
All four Vanguard funds pay quarterly dividends, the highest dividends being expected from the FTSE Asia ex Japan High Dividend Yield Index ETF which is easily my favorite of the three new offerings and I will definitely consider adding it to my portfolio soon.
Now if only Vanguard could launch some of their ETFs on the Singapore Exchange (SGX)! Or offer some of their bond ETFs in Singapore or Hong Kong…
One question
Why did you invest in the Vanguard-Hong Kong ETFs rather than the equivalent Vanguard-UK ETFs?
The TER is lower in the UK than HK ETFs. Isn’t the purpose of passive investing is to keep the cost of investing low? Furthermore the developed Europe for Vanguard’s UK etf has bigger total asset, so shouldn’t that give small bid/ask spread than Hong Kong?
Is there a good reason to invest in HK’s etf?
For example
Developed Europe
HongKong: 3101:HK, TER: 0.25%, Total Asset: $91.66 million
UK: VEUR, TER 0.12%, Total Asset: €292.0 Million
Asia Ex Japan
Hong Kong: 2805:HK, TER: 0.38%, Total Asset: $142.13 million
UK: VAPX, TER: 0.22%, Total Asset: $95.2 Million
Thanks
Very good point! I did not notice that the expense ratios are so much lower for the UK listed funds. HKD is a bit more comfortable than GBP for me as a currency because of the peg to the USD, but it is of course subjective. With no withholding tax for dividends paid out by UK listed funds (to the best of my knowledge, http://singvestor.com/withholding-taxes-for-singaporean-investors-of-foreign-stocks/) buying VAPX or VEUR might be a good idea. Thanks for pointing this out 🙂
My big hope is that Vanguard might list some ETFs in Singapore in the future, since this would save the currency conversion fees.
According to other online posts, the price of ETFs is not be exposed to currency risks of the value of the base currencies it is traded with ( e.g. VAPX traded in British pounds). Since VAPX is composed of a basket of Asian equities (VAPX), therefore VAPX value is exposed to Asian currency risks, not British currency.
So i don’t think it currency risks is not the issue here. However the posts did mention that it can be a “hassle” in balancing the portfolio when your equities are in different brokerage accounts (sell and buy fees) and in different stock exchanges (currency conversion fees).
But you are right that the currency conversion fees is a hassle.
Thanks for your blog though, i learnt more from you. 🙂