Asked on 02 Nov 2020
Nicholas Beh, Student Ambassador 2020/21 at Seedly
Answered on 02 Nov 2020
3169/83169/9169 are the ticker symbols for Vanguard's Total China Index ETF. Just to let you know, Vanguard is planning to pull out of Hong Kong, so it may be better for you to find an alternative ETF from a different provider. You may be forced to liquidate should they close it down, and you could incur switching costs.
In terms of currency risk, the trading currency of an ETF does not matter, unless it is currency hedged. The currency risk you are exposed to is to the currency of the underlying assets in which the ETF invests into. In this case, that would be CNY (because China), not USD or HKD.
Instead, you should look at the liquidity of each of these tickers - a quick look tells me that 9169 is more actively traded. This could mean that there are more market participants and lower bid-ask spreads, which are beneficial to you especially in times of high volatility.
1 more comments
02 Nov 2020
What you mention is exactly referring to currency risk. In simplistic terms, when you buy the ETF, your USD/HKD will be "converted" into CNY, because the underlying assets are Chinese companies doing business using CNY. Similarly, when you sell, it will be "converted" from CNY into USD/HKD. In this case, your currency risk lies with CNY and you would hope for CNY to appreciate.
There is no difference between similar ETFs in HKD or USD. It doesn’t matter what currency your ETF is in as long as they invest in the same thing.
Yes, ETF with low AUM will likely have lower volume and a larger bid ask spread. If the ETF close down, the fund manager will liquidate all the investments and return the money to the investors. If it happens during stock market crash, they will have to liquidate at a loss.
“Have you ever seen a ETF that says its currency is dollars, while another version of the same product is labelled in pounds? That makes no difference whatsoever to your currency risk. What counts is your exposure to the currency the underlying securities trade in.” By justetf.
You can research more about etf currencies online
02 Nov 2020
Thanks for the clarification. My concern is not really about currency risk. It is actually the fx rate when i wanna to liquidate all my assets when i retire in 25 years time. Usd to sgd used to be 1.7 many years back but now is it only 1.4, so when i convert all the usd back to sgd for retirement, the amount i am getting will be much lesser because of the fx rate. Therefore, if possible, i want to know if it will be wiser to invest in usd or hkd? Which currency will be stronger in 25 years time? I know it is hard to predict the future but i hope i can get some insight from the gurus here.