Boglehead in Hong Kong - What to buy?

[Steven_van]

Hi Bogleheads,

I am 36 years old and my AA is 60% stocks, 20% bonds, 20% Gold/Silver, I got about 100,000 USD to invest which I won't be needing anytime soon. I am a HSBC Premier account holder and also have a trading account at Boom.com. Given that Hong Kong, in particular HSBC, does not offer many index fund choices, here's what I like to set up:

Stocks
40% DB X-Tracker MSCI World Index (03019)
20% Schroder ISF-Emerging Markets (SEMNX)

Bonds
20% ABF Pan Asian Bond Index Fund ((02819)

Gold/Silver
10% Gold ETF (02840)
10% Silver ETF (03117)

I was looking for a global Bond index fund or ETF, but couldn't find any (listed in HK) - any ideas? Also, considering if I should rather buy a resource index ETF, instead of gold/silver ETFs.

Thanks for sharing your thoughts on above AA!

Regards
Steven

[hlfo718]

Since you have the boom account, can't you buy etfs that are traded in the US since they may be more liquid, may have lower fees, and more options? You can buy VT, which is the Vanguard World Index that has about 10% in emerg mkts. Since you are living in HK, don't you also want some more exposure in your home country? You can buy the Hang Seng index ETF traded in HK. As for gold/silver, why such high allocation? Why not replace some with REITS? You can find a bunch of commodities ETF or ETN traded in the US, ditto for the bond allocation, spread your money around.

One thing to keep in mind, even though HKD is pegged to the USD now, you never know if or when it stops. So you may want to allocate some portion in HKD ETFs.

[Steven_van]

Hi hlfo718,

Thanks for the answer! You are right, trading in the US offers lots of more options and liquidity. Will keep that in mind.

One interesting comment from you was re. the currency link - I believe that the money printing in the US (and EU) will continue and there will devalue the US significantly in the next 3-5 years. Therefore I think Gold and or Silver will benefit from that significantly. Seems many Bogleheads rather choose REITS or just have a worldwide tracker and bond fund, right? Am interested why that is and not also try and benefit from the stronger Gold and Silver!?

[nydad]

there are many opinions about gold and silver. Permanent portfolio suggests holding 25% in gold. many bogleheads own 0%. I keep 5% mainly as something to rebalance in if gold spikes or to protect from hyperinflation or other extreme scenarios - I also agree the federal debt is an issue.

As you know, Chinese are buying a lot of gold, as are central banks, but then again, you're not a central bank...

[hlfo718]

This is only my opinion. Since gold and silver provide no actual cash flow, your only hope is that there is a higher demand, for whatever reason, to drive the price up. Otherwise you are holding a metal that does nothing. While non div paying stocks also provide no immediate cash flow, but the expectation is they will eventually or have the potential to pay out, look at Apple and other high tech stocks that paid nothing 10 years ago. And with stocks you have the potential of price appreciation so your total return can be from more than one source, unlike gold. REITs, like stocks, provide a cash return and potential price appreciation as well.

Another thing that holds me back on gold is if the US does face higher inflation than expectation, which may cause the dollar to drop. How will that impact gold since the gold investment is in USD? I am guessing that will be some offset against each other but I really don't know that much and also what are the real drivers for gold over long term?