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Index funds advice seeked

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  1. #1

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    Index funds advice seeked

    Hi

    I've never put a dime in the stock exchange but think of investing a bit in an index fund. Which funds should I look to invest money originating from HSBC HK ? Looking for funds with low maintenance costs from which I could withdraw whole or part of my investment fairly easily, and to invest 150 k to 350K usd over the next 18months.

    Could you give me some leads ?

    Thanks
    Luis


  2. #2

    Hi Luis,

    The best way to invest is to learn more about investing yourself or, if you don't have the time or inclination, to go see several financial planners and see which one you think understands you best and that you can trust to do the best for you. However, please note that there are many so called financial advisors/planners who don't know much about investing and/or out there to get a commission off what they sell you regardless of whether it's the best for you or not. (Many, but not all. I'm sure there are some good ones out there).

    That said your question is like going to a doctor and asking him what's the best medicine he can give you. Without looking at your personal situation it's impossible to say. And if he did suggest some medicine, i.e. financial products, without even looking at you, I wouldn't trust him.

    Like what are your goals and objectives? What's this money for? Your retirement? What's your investment period? What's your risk tolerance? Do you have people who depend on you financially? What other investments do you have already, if any? No need to answer these questions as I'm just trying to say there's too many variables and for anyone to answer your question properly they need a lot more information.

    Not actually sure what you mean by "Which funds should I look to invest money originating from HSBC HK ?" Do you mean which funds to start with that includes HSBC (as listed on the Hong Kong stock exchange)?

    I could mention some Hong Kong index funds but without knowing more about your situation I don't even know if you should be putting your money in the stock market at all.

    If you don't know what you're doing it's like trying to cross a road blindfolded. Learn more about investing yourself. Failing that get yourself someone you can trust to help you and who knows what they're doing.

    Sorry if it sounds a bit harsh but can you risk losing most of that money because you don't know what you're doing?

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  3. #3

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    I am also relative new to investing. There is the Hang Seng Index tracker fund (2800) and the Hang Seng Index ETF (2833). Maybe there are others too but these are the two I know with my limited local knowledge.

    You should be able to buy both of them easily through HSBC, you will have to pay a transaction fee. They both track the performance of the Hang Seng Index.

    Not sure what exactly is the difference between those two, apart from the different lot size and the different price. PDLM mentioned somewhere that you would get dividend with the tracker fund (if you hold on to it long enough I suppose), not sure if that is also true for the ETF.

    You can sell all or parts of your stocks anytime, but it will depend on the HSI if you can sell with profit or loss. Also, you will have to pay a transaction fee for the sales transaction. As far as I know that's normally around 0.2% to 0.5% including the government fees, depending on your bank.

    You can use pages such as Google Finance, Reuters, Yahoo, etc to check the past performance out.

    If you have stock trading enabled on your internet banking, you can simply buy and sell your stocks online. You enter the stock numbers, get a real time quote, buy at the market price, then you hold on to it. If you don't have this option in the internet banking, you can call phone banking and have them do it for you.

    Last edited by 100LL; 03-04-2010 at 09:17 AM.
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  4. #4

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    2800 Tracker Fund is the way to go for Hong Kong. Minimal management fees, genuinely tracks the Hang Seng (because it's run by the Government and they actually do own the underlying stocks (a legacy of a previous financial crisis). And it pays dividends as if you owned the underlying stocks.


  5. #5

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    Thanks for your 3 replies !

    Chris, I'm planning to remove some money from my main trade over the next 18months, and keep it almost cash but hopefully with a higher return than if sleeping in a bank account . Although it may change in the course of next year, I hardly spend anytime in HK at the moment so consulting financial planners won't be easy. Besides as you mention they would probably try and sell products they have an interest in, hence my question on this board where many posters seem familiar with the stock market.

    I read very little about the stock market and it was years back, but remember (allegedly substantiated) claims that index funds usually beat actively managed funds over the long run and I'm definetely not going to manage my stocks myself - although this first investment could be a good way to look more intensely into stock related matters.

    PDLM and 100LL, thanks a lot for your advice , I will look into the 2800 fund. Yet I'm not particulary looking for funds tracking the Hang Seng, but any index ( could be from the US or Europe ). I asked about HK because the investments would be done through a HK company, but if it's a Euro or USD and I don't have to incur currency exchange loss it would be possibly better.

    As of doing it through HSBC HK, do you reckon it's the way to go, or is there any interest looking into etrade or similar website , considreing as well I'm looking for minimal activity ?

    As of the fees, are they the same when dealing in an HK index fund or an offshore one ?

    Thanks again
    Luis


  6. #6

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    If it's an ETF traded on the HK exchange then the dealing costs will be the same as the Tracker Fund or any individual stock. The list of ETFs traded in HK is here: List of Securities Market Makers and Listed ETFs

    Watch out for the fact that some of these ETFs have quite low liquidity (not a problem for 2800).


  7. #7

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    Things got a bit complicated since I just have the secondary user security device working at the moment and have never used the phone banking, hence don't remember the codes... so it will take some time until I can register an investment account and buy any index fund via this account.

    Yet, following the link PDLM gave on the post above the 2800 tracker fund doesn't seem to be sold by HSBC and going through their selection of funds in their investment portfolio, I can't find it either. Are you positive one can invest in the 2800 HK tracker fund using HSBC online banking ?

    Besides is there any interest to open an account with etrade if I plan to invest in other (index) funds worldwide but don't plan beeing very active ?


  8. #8

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    You're misunderstanding - the 2800 Tracker Fund is traded just like any other stock on the HK Stock Exchange. This is the essence of Exchange Traded Funds (ETFs). You can buy it through anyone who offers you stock trading services (including HSBC Online banking). "2800" is its stock code. I am currently holding a few in my HSBC account and have traded them through online banking several times over the last decade.

    You can see a list of all the ETFs on the HK Exchange (and their stock codes) here: http://www.hkex.com.hk/eng/prod/secp...f/etfindex.htm

    Any one of them can be traded in exactly the same way as a stock through any broker.

    Last edited by PDLM; 07-04-2010 at 05:56 PM.

  9. #9

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    Thanks for the clarifications ! Yet am I right thinking I still need to register for investment account through my HSBC internet banking before buying shares ? Which is most definetely a solvable issue but will require some time untill I get hold of a new primary user security device.


  10. #10

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    Yes - if you'll need an investment account with HSBC. I was under the impression that Premier and Advance accounts came with them automatically, but I could be wrong.


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