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Beginner investor questions: ETFs vs managed funds, what happens when I move back to the UK

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  1. #1

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    Feb 2019
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    Beginner investor questions: ETFs vs managed funds, what happens when I move back to the UK

    Hi all,

    My situation: I'm a UK expat, 33 years old, married, have been in HK for 7 years, plan to return to UK within the next 5 years. I have saved up some cash of which HKD 250K+ I want to invest with a buy-and-hold strategy. I have a "4 out of 5" risk appetite and intend to invest 80% equity / 20% bonds. I want it to be low-fee but need to consider that I have limited investment knowledge (certainly compared to you folks!) and don't want to screw up my savings by investing in the wrong thing because I overestimated my abilities. My questions are as follows:


    • The hands-off/easy approach would be to invest with HSBC Expat, with whom I already have an account, and stick my money in their HSBC world selection, matching exactly my risk appetite mentioned above. However, the high fees put me off and I owe it to myself to try a more hands-on investment approach. However, before I rule it out - has anyone had experience investing in this way (either through HSBC expat or similar) and has it been worthwhile? Does anyone else have a recommendation for other managed investment funds?
    • The hands-on approach would be to invest in ETFs. This is what I want to do but I feel my knowledge is lacking in both which ETFs to invest in and which broker/platform to use. My plan would be to invest in 3-5 ETFs and only touch again after a year in order to rebalance. I have the following questions:
      • Which broker: IB is geared toward active investing particularly given the inactivity fee. Does anyone have experience of using IB for passive / buy-and-hold? If not, which online broker would you recommend for buy-and-hold? Has anyone had success of investing in ETFs using an HSBC investment account? I know both of these points have been been mentioned in other threads but I didn't see any definitive opinions.
      • Which ETFs: There are a lot of online resources geared toward UK and US residents listing the "top n" ETFs for buy-and-hold, but I can't find anything for HK. Are there any "ETFs of choice" in this community?

    • What happens when I return to UK: Can I keep my investments ticking over even after I move back to the UK? My understanding is that if I want to avoid UK capital gains tax I would need to sell all my stocks before leaving HK. Considering these assumptions, is it even worthwhile for me to be investing now?


    Many thanks in advance and grateful for any help!
    Elegiaque likes this.

  2. #2

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    - You can buy UK listed ETFs through HSBC HK / Broking. A bit of a pain in the arse to buy, but you can.

    - DBS, IB and Saxo both offer UK ETFs. Saxo is a little bit expensive, as they have a small (0.1x% fee). I think DBS also has an annual charge, but it is capped. IB and Saxo have UK presence. DBS does not, if this is an issue.

    - With the amounts and time frames you have, I'd not bother with rebalancing. I would however, be ready to reinvest and buy more during large dips. But that is me.

    Might want to consider reading through this thread - similarish situation as you.

    Ireland ETFs - https://geoexpat.com/forum/155/thread351793.html
    HK Portfolio - https://geoexpat.com/forum/155/thread349640.html

    I don't think buying ETFs is "active" infact the underlying investment is far less active than an a HSBC fund.

    Don't have any tax advice - except generically speaking shit changes in the UK every day/month/year (much like the stock markets) and I'd not worry about it until you've firmed up your decision to move.

    Again, no clue about UK taxes and your situation - that is your and only your risk/problem.


  3. #3

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    Feb 2019
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    Many thanks, shri, for the detailed advice! I've spent some time browsing through the threads and the suggested "simple ETF portfolio" would probably be a good start for me. The only outstanding question remains what happens upon returning to the UK. Let me re-phrase from a different angle and hopefully there may be an opinion out there. Apologies in advance if this is all obvious!:

    a) Is it possible (either by HK law or individual bank/brokerage policy) for someone who is no longer HK-resident to continue investing via their HK brokerage account?
    b) If someone is no longer HK-resident, can they just keep their investments in place (made while HK-resident using their brokerage account) and watch them (hopefully) grow over time up until whatever point in time they are ready to sell?

    The position I'm coming from is that I may want to invest now, but may not want to sell for another 10+ years, which will be after I have left Hong Kong.


  4. #4

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    Quote Originally Posted by wharrison6
    a) Is it possible (either by HK law or individual bank/brokerage policy) for someone who is no longer HK-resident to continue investing via their HK brokerage account?
    b) If someone is no longer HK-resident, can they just keep their investments in place (made while HK-resident using their brokerage account) and watch them (hopefully) grow over time up until whatever point in time they are ready to sell?
    The answer to both questions is yes absolutely at some banks/brokers.
    I've got a large number of friends who left HK a long time ago, they kept and still operate their HK-based brokerage accounts.

    Of course if you want to be sure, ask your specific bank/broker. Personally I've been able to operate stocks accounts at IB, BOC, CITI, HSBC, and CPY all in HK, as a Singapore resident.
    Last edited by jrkob; 23-02-2019 at 06:32 PM.
    shri likes this.

  5. #5

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    Quote Originally Posted by jrkob
    The answer to both questions is yes absolutely at some banks/brokers.
    I've got a large number of friends who left HK a long time ago, they kept and still operate their HK-based brokerage accounts.

    Of course if you want to be sure, ask your specific bank/broker. Personally I've been able to operate stocks accounts at IB, BOC, CITI, HSBC, and CPY all in HK, as a Singapore resident.
    To add to this, although you should be able to continue to execute transactions through your accounts after leaving Hong Kong (so long as you don't move to the US). However, you may find yourself being cut off from distribution of new products + research materials.

  6. #6

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    jrkob and traineeinvestor - many thanks for your helpful responses.


  7. #7

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    In case of IB is it possible to move your account from oner subsidiary to another. For example: you open an account at IB HK, put your money there and buy a basket of ETFs. If you move to another country (e.g. UK) you can contact IB afterwards and inform them that your residency has changed. In that case can they open a new account for you at IB UK and move over all your ETF positions to your new account. This position transfer is without costs.


  8. #8
    bdw
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    Nothing is stopping you keeping all your accounts, shares, etc in Hong Kong even after moving back to UK. However, for taxation purposes, if you are resident in UK rather than HK then you will be subject to capital gains tax (CGT) etc on all your investments/income worldwide that you were not subject to when you were a HK resident.

    For this reason, you may want to consider selling before returning to UK to avoid CGT. Or you may want to consider something like an "Offshore portfolio bond" which is a fake name and not a bond at all but some kind of 'wrapper' you can put around all your existing investments before you go to UK and then it gives you some legal tax advantages. For UK citizens, I am not sure the benefits. For Australians, it is quite good because if you hold this bond for 10+ years then all income/gains made are 100% tax free for life. It's a good way to retire in Australia and legally avoid paying any tax on your overseas investments.

    shri likes this.

  9. #9

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    Theoretically you could dispose of your stock in annual tranches to keep your capital gain below the UK capital gains tax free allowance (others with UK knowledge please correct me if Im wrong). Obviously depends on your investment goals etc.