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Getting International Exposure

Discussion in 'Exchange Traded Funds (ETF)' started by Chris C, 13th Jul, 2009.

  1. Chris C

    Chris C Well-Known Member

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    I was just wondering how others on these forums were going about getting international exposure when it comes to their share investments?

    I have been looking into some of the iShare ETFs of late, and whilst their managements fees for their BRIC/Asian ETFs are highish (0.7%+) they seem a lot lower than many of the other managed fund options out there (like Platinum).

    So I was just wondering what people thought of these iShare ETFs and if there were better/other alternatives to getting exposure to the BRIC/Asian markets?
     
  2. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    I don't know of any cheaper alternatives - as you mentioned most managed funds are quite a bit more expensive.

    However, I'm not sure if the iShares use currency hedging at all? Depending on your thoughts on whether hedged/unhedges is better (almost a religious debate!), there may be benefits on utilising someone like Platinum to help manage some of the currency risk inherent in investing internationally?

    Of course, even Platinum recognise that not everyone wants the currency risk "managed" for them (even the managers get it wrong sometimes), hence their "Platinum Unhedged" fund.
     
  3. Chris C

    Chris C Well-Known Member

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    I'm actually looking to utilise the AUD while its still strong.

    The way I see it with the amount of debt we have amassed plus our long standing large current account deficits make it unlikely that our currency will surge against the Yuan in the long run, which has arguably been suppressed by the Chinese government to facilitate their export growth strategy.

    Though maybe Tropo might like to chip in his thoughts on the currencies markets, he's probably a lot more informed on the issue than I.

    I guess the really important thing is that I won't be taking any leverage into any of my purchases for the foreseeable future. So currency movements in the short term don't really threaten the investment, plus I'm looking to invest with a 5 - 10 year horizon.

    Is there anything else I should be considering when looking to invest abroad?
     
  4. Tropo

    Tropo Well-Known Member

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    There is a lot of books written on this subject.
    Some very basic info is here:
    How U.S. Firms Benefit When The Dollar Falls
    Forces Behind Exchange Rates
    Commodity Prices And Currency Movements
    Below link explains basically what any investor should take under consideration when investing abroad no matter how long/short time span may be.
    Currency fluctuation ... http://www.invested.com.au/7/us-fund-distribution-1065/

    "Is there anything else I should be considering when looking to invest abroad?"

    There are a number of pitfalls for the individual investor investing in a Chinese company. Be sure to find out how it operates and whether it is likely to act in the best interest of its shareholders

    Karl Pilny, a German expert on China and Japan, and author of "The Asian Century" (Campus Verlag, 2005), warns of the naivety with which "Western firms pour billions (of dollars) into China.
    He is concerned that, over time, joint ventures there may not work out well, due to various clauses in contracts that enable the Chinese to get the best out of the deal - at the expense of foreign investors...
    more...Why Country Funds Are So Risky
    also... Investing In China
    Ah yes... AUD/USD short term range: 0.7495 ~ 0.7876
     
  5. Chris C

    Chris C Well-Known Member

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    Thanks Tropo, I appreciate the feedback. Now I'm off to do some reading...

    :D
     
  6. Tropo

    Tropo Well-Known Member

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    Have fun...:p
     
  7. Chris C

    Chris C Well-Known Member

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    Just out of interest, Tropo do you make any long term international investments (5 year +) that are exposed to currency fluctuations?

    Also what are your thoughts on where the AUD will be against most Asian countries in the next 5 - 10 years?
     
  8. Tropo

    Tropo Well-Known Member

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    "Just out of interest, Tropo do you make any long term international investments (5 year +) that are exposed to currency fluctuations?"

    No...but I may consider some options in the future (I am not interested in Asia at all!)

    "Also what are your thoughts on where the AUD will be against most Asian countries in the next 5 - 10 years?"

    Nobody knows...including me (shame on me) :eek:
    To me the next 5~10 years is like millennium to others...(I prefer shorter timeframes).
    Ah yes....Yuan....unless China lets its currency trade freely, Yuan as a leading currency is a wishful thinking. :rolleyes:
    As the best outcome in the distant future (IMHO) Yuan may become a 4th world currency after USD,EUR,JPY, but at the moment I would not bet on it.
     
  9. Chris C

    Chris C Well-Known Member

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    Playing contrarian? Or other reasons?

    Interesting... I'm calling Yuan to supercede all of those within 10 years, maybe 7. Though I also see China continuing its movement toward more financial transparency and liberalism.

    :D

    I'm looking forward to the communists teaching the west a thing or two about capitalism.
     
  10. Tropo

    Tropo Well-Known Member

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    "Playing contrarian? Or other reasons?"

    Waiting for an opportunity at the right time. ;)

    "Though I also see China continuing its movement toward more financial transparency and liberalism."

    You must be extremely patient person...:eek:

    "I'm looking forward to the communists teaching the west a thing or two about capitalism."

    There is an old communist saying by V.I Lenin - “The capitalists will sell us the rope with which we will hang them.”
     
  11. Chris C

    Chris C Well-Known Member

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    I must admit I really admire the way China has strategically gone about its business over the last two decades. I really think they have really put themselves in the driving seat when it comes to the world economy.

    However I think even China must be aware that despite their collective size and influence they are still being thwarted by the nimble and organised capitalists.

    *cough* Stern Hu *cough*

    I'd be pissed too if I was China and trying to negotiate contract prices with RIO and BHP leveraging their size, all the while RIO are leveraging their capitalist nature (aka bribery and espionage) to undermine China's bargaining position.

    Ahhh the bitter sweet reality of capitalism.

    :D

    Either way to move further forward China will almost certainly be aware that it will have to give up certain restrictions and controls to the free market, and in time I'm sure they will if they hope to continue their economic progress.
     
  12. bundy1964

    bundy1964 Well-Known Member

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    Currency wise I think we are above long term value, higher interest rates than JPY and US is helping keep it there while things are not turning pear shaped.

    China still has a one child policy which will give it an ageing population and they seem unwilling to let their currency trade in a free market. Looks to be a lot of room for domestic growth and higher standards of living at the cost of them losing some of their competative edge.

    Asia excluding Japan seems to have growth potential still.

    Europe still has some countries that are looking pear shaped still as are parts of the US. Buying oppertunity still? I dipped a toe into the world 100 via IOO. MFF while not a ETF has got me interested in having a look.