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Post by chang on Dec 22, 2020 4:40:21 GMT
Continuing the discussion started by rhythmmethod here: I see a variety of reasons to ratchet up exposure to China, looking ahead, including: - More China-friendly US trade policy
- Lack of US/European style regulations on business
- Lack of taxation-related litigation (compare to Microsoft and Amazon problems in Europe)
- Lack of corporate pressures around climate change and ESG issues
- Greater control of Covid-19 throughout Asia, helping to maintain consumer demand for Chinese goods within their home region
Some interesting papers written by the Artisan ARTYX manager on China: www.artisanpartners.com/content/dam/documents/reprints/mf/Bloomberg-World-Beating-EM-Fund-14-July-20-vR.pdfwww.artisanpartners.com/content/dam/documents/quarterly-commentary/vr/2020/2q/ARTYX-APDYX-APHYX-CNBC's view: www.cnbc.com/2020/09/16/stock-market-today-its-time-to-invest-in-china-etf-analyst-says.htmlSome diversified international (not necessarily EM) funds are fairly China-heavy, such as: VWILX (Vanguard Intl Growth) with 22% China/HK. Some diversified EM funds are unusually China-heavy, such as ARTYX (Artisan Developing Wrld) with 39% China/HK, and T Rowe Price's PRMSX with 40% China/HK. A Google search of "Ray Dalio on China" picks up numerous articles: - 'It's not just a trade war': Ray Dalio on why China's rise means big headaches for US, the world
- Ray Dalio on why Chinese capitalism is on the rise, and why American capitalism is in desperate need of a fix—Dalio projected that roughly 40% of new initial public offerings will soon be "raised by Chinese companies, on Chinese exchanges"
- Ray Dalio: Don't be blind to China's rise in a changing world—Dalio opined that many are missing China's extraordinary performance, including its remarkable economic changes over the past four decades
- Billionaire investor Ray Dalio said "everybody is underweight on China"
- Dalio Says 'Time Is on China's Side' in Power Struggle With U.S.
- Ray Dalio Is Bullish on Chinese Bonds on Growth and Yield Bet
- Ray Dalio: China's ascension, U.S. challenges pose 'a very special moment' for global market shift
- Ray Dalio says now is 'special moment' for markets as China ascends—Dalio's comments reinforce recent remarks that he sees the need to have "a significant portion" of Bridgewater's portfolio in Chinese assets.
- Don't be blind to China's rise in a changing world - Anti-Beijing bias has blinded too many for too long to opportunities
Interesting to hear if and how others are increasing/decreasing their exposure to the China region.
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Deleted
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Post by Deleted on Dec 22, 2020 5:13:58 GMT
i have been considering increasing India.
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Post by chang on Dec 22, 2020 11:54:50 GMT
i have been considering increasing India. Long term I think that's a great idea. But the Sensex rose from 25,600 to 47,000 in a straight line from March to December, an increase of about 83%. The Shanghai index climbed about 31% quickly from March to July, but has been trading sideways since then. That's why I'm more interested in China as a buy just at the moment.
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Deleted
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Post by Deleted on Dec 22, 2020 14:37:21 GMT
I agree on China. I have taken position in ARTYX and FSEAX. both 40% china. I am risk averse by personality so not buying any china specific fund.
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Post by steadyeddy on Dec 22, 2020 17:26:38 GMT
China = Risk. Source of Pandemic; US policy towards China will get tougher; Geo-political positioning of China is not favorable; I don't believe the "books" of Chinese companies. Plus, we will see more de-listings of Chinese companies from the western stock markets.
I am completely avoiding China from my investments; in fact I have completely eliminated international stock holdings.
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Post by anitya on Dec 22, 2020 18:17:10 GMT
China = Risk. Source of Pandemic; US policy towards China will get tougher; Geo-political positioning of China is not favorable; I don't believe the "books" of Chinese companies. Plus, we will see more de-listings of Chinese companies from the western stock markets. I am completely avoiding China from my investments; in fact I have completely eliminated international stock holdings. Thanks for your post. I have less than 4% in dedicated international equity investment - all thru OEFs and one ETF. I am watching a lot of people are increasing their international exposure while I am dragging my feet on it. Generally speaking most of the gains this year in international investing (relative to US) came from Asia. I have not dug deeper for exceptions. I can not tell how much of those gains are ability to control COVID (India contradicts this) and how much are related to folks all of a sudden waking up to already simmering economic prospects of those countries. I have not been successful in previous attempts at international exposure. Also, I am not sure if managers sitting in the US and occasionally traveling to Asia can add value, other than following Asian equity market trend? Would love to hear your reasoning for eliminating international equities.
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Post by steadyeddy on Dec 22, 2020 18:46:41 GMT
China = Risk. Source of Pandemic; US policy towards China will get tougher; Geo-political positioning of China is not favorable; I don't believe the "books" of Chinese companies. Plus, we will see more de-listings of Chinese companies from the western stock markets. I am completely avoiding China from my investments; in fact I have completely eliminated international stock holdings. Thanks for your post. I have less than 4% in dedicated international equity investment - all thru OEFs and one ETF. I am watching a lot of people are increasing their international exposure while I am dragging my feet on it. Generally speaking most of the gains this year in international investing (relative to US) came from Asia. I have not dug deeper for exceptions. I can not tell how much of those gains are ability to control COVID (India contradicts this) and how much are related to folks all of a sudden waking up to already simmering economic prospects of those countries. I have not been successful in previous attempts at international exposure. Also, I am not sure if managers sitting in the US and occasionally traveling to Asia can add value, other than following Asian equity market trend? Would love to hear your reasoning for eliminating international equities. Anitya - Primary motivation is simplification of portfolio as I am approaching retirement. I do not believe there is an 'alpha' in international market exposure plus the US companies will continue to derive significant profits from international sales which is adequate for me.
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Post by rhythmmethod on Dec 22, 2020 22:07:55 GMT
China = Risk. Source of Pandemic; US policy towards China will get tougher; Geo-political positioning of China is not favorable; I don't believe the "books" of Chinese companies. Plus, we will see more de-listings of Chinese companies from the western stock markets. I am completely avoiding China from my investments; in fact I have completely eliminated international stock holdings. I'm taking the other side of that bet. One can look at China-centric/specific funds and how they have performed the past year. - MATFX, ARTYX and many others - Devaluation of the U.S.$ China is basically on the other side of the virus while the US hasn't seen its darkest days yet. Any bouts of "China Drama" will be opportunities, I believe, to increase exposure. Having lived a while in China and taught students, the Chinese work ethic is waaaay beyond that of the U.S. Only my opinion.
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Post by steadyeddy on Dec 23, 2020 1:23:25 GMT
China = Risk. Source of Pandemic; US policy towards China will get tougher; Geo-political positioning of China is not favorable; I don't believe the "books" of Chinese companies. Plus, we will see more de-listings of Chinese companies from the western stock markets. I am completely avoiding China from my investments; in fact I have completely eliminated international stock holdings. I'm taking the other side of that bet. One can look at China-centric/specific funds and how they have performed the past year. - MATFX, ARTYX and many others - Devaluation of the U.S.$ China is basically on the other side of the virus while the US hasn't seen its darkest days yet. Any bouts of "China Drama" will be opportunities, I believe, to increase exposure. Having lived a while in China and taught students, the Chinese work ethic is waaaay beyond that of the U.S. Only my opinion. May your theory prove right. I am sending best wishes.
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Post by Norbert on Dec 23, 2020 7:39:25 GMT
Eddy's points are certainly well taken.
However, I do think that the Chinese Communist Party grasps the value of free market capitalism to make their economy hum and to keep the people happy. Their discipline during the Covid-19 outbreak says something about the cohesion and focus of their society ... while the West floundered.
I expect China to continue its rise in quality and innovation; no longer just producing knockoffs of foreign products.
I am aware of the drive for success and capabilities of the Chinese from my years in San Francisco and Berkeley. Family prosperity is everything.
France is tearing itself apart trying to deal with Islamic extremism, agonizing about how to control it. I don't think I need to explain China's attitude on this front. The phrase "zero tolerance" describes it; never mind any ethical implications.
So, I'm overweight Asia / China region.
N.
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Post by chang on Dec 23, 2020 8:36:04 GMT
I did some research a short while ago on future investment and spending around the world on infrastructure and energy projects. I obtained information from a variety of sources, for example: www.swissre.com/institute/research/sigma-research/sigma-2020-03.htmlFrom this paper: "Emerging Asia will be where most new infrastructure is built, with total investment estimated to average USD 1.7 trillion annually over the next 20 years, or 4.2% of GDP, accumulating to USD 35 trillion in total. China will invest USD 1.2 trillion (4.8% of GDP) each year, accounting for 35% of global and 54% of all emerging market investment in infrastructure."
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Post by Deleted on Dec 23, 2020 10:43:46 GMT
Infrastructure is very capital intensive and not as profitable. Is there a correlation between infrastructure spending and stock market returns?
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Post by Deleted on Dec 24, 2020 15:08:14 GMT
Most chinese funds have good % in BABA. They should all get hit today. BTD or wait?
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Post by rhythmmethod on Dec 24, 2020 15:23:16 GMT
Most chinese funds have good % in BABA. They should all get hit today. BTD or wait? I’m adding some and waiting to add more. Edit to add - to steadyeddy excellent points. Looks like today represents his concerns. It's also ALL over Barrons. I think one can't view the link unless they have a Barrons subscription. You can google it. I'll try to post a synopsis late. -I'm a buyer of MATFX and VWIGX due to expected drop in BABA and Tencent.- The country could still be a ripe huntingground for long-term investments, even with increasing risks - From Barrons Link
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galeno
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KISS & STC
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Post by galeno on Dec 24, 2020 23:30:54 GMT
The "FTSE all world equity ETF" we use (VWRD) holds 5.4% Chinese equities. 45% of port. We hold EM equities (VDEM) at 5% of port so our equity allocation holds 8.5% Chinese equities. 57% more than holding VWRD alone.
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Post by chang on Jan 13, 2021 1:00:59 GMT
Anyone noticing that China region funds are doing well in 2021. FHKCX (my choice; probably not the best, but convenient since I am periodically exchanging from a Fido bond fund into FHKCX in an IRA) is up 4.4%. TCELX (wish I'd bought it) is up 10.9% (available at TDA but not Fido). MATFX/MITEX, incidentally ( rhythmmethod) is up 9.5% YTD. I won't be spooked by these early jumps. I think China region funds will rise throughout 2021, and I am prepared to keep buying on the way up à la R48's "PyrUp" scheme.
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Post by anitya on Jan 13, 2021 3:13:05 GMT
Anyone noticing that China region funds are doing well in 2021. FHKCX (my choice; probably not the best, but convenient since I am periodically exchanging from a Fido bond fund into FHKCX in an IRA) is up 4.4%. TCELX (wish I'd bought it) is up 10.9% (available at TDA but not Fido). MATFX/MITEX, incidentally ( rhythmmethod ) is up 9.5% YTD. I won't be spooked by these early jumps. I think China region funds will rise throughout 2021, and I am prepared to keep buying on the way up à la R48's "PyrUp" scheme. chang ⟮chang⟯, MATFX forward P/E is 35 as of September 30, 2020 - per fund site. Since then, the fund has returned 33%. The fund's exposure to Technology (15%) is the lowest one would find in a growth fund. Seems the contribution to high P/E is primarily from other sectors as well. The weighted average market cap is $170B. So, the high PE is not from small growthy companies (irrespective of sector). Fund portfolio turnover is 80% - so, may be the Sept 30 P/E information is not relevant now, but the fund year end (and full year) distribution in 2020 was 1.8% and in 2019 was 0.3% does not reflect the high portfolio turnover. Is that too rich? May be not if the portfolio constituents are all a potential AMZN! I have not analyzed AMZN when it was a $170B company - using it just for conversation. I get that Mathews Asia are as good as they come for Asia EM. P.S.: The fund defines portfolio turnover as "The lesser of fiscal year 2019 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities." What the heck does it mean?
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Post by yogibearbull on Jan 13, 2021 3:29:52 GMT
anitya : " P.S.: The fund defines portfolio turnover as "The lesser of fiscal year 2019 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities." What the heck does it mean?" That is the standard definition of turnover found in fund prospectuses. So, if a $1 billion AUM fund bought/sold $100 million and sold/bought 150 million, turnover is min [100, 150] / 1,000 = 0.10 or 10%. I find this strange too. In my own portfolio, I add buys and sells and call that my portfolio effort. If I use that for above fund example, that would be [100 + 150] /1,000 = 0.25 or 25% of doing something.
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Post by anitya on Jan 13, 2021 6:29:43 GMT
anitya : " P.S.: The fund defines portfolio turnover as "The lesser of fiscal year 2019 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities." What the heck does it mean?" That is the standard definition of turnover found in fund prospectuses. So, if a $1 billion AUM fund bought/sold $100 million and sold/bought 150 million, turnover is min [100, 150] / 1,000 = 0.10 or 10%. I find this strange too. In my own portfolio, I add buys and sells and call that my portfolio effort. If I use that for above fund example, that would be [100 + 150] /1,000 = 0.25 or 25% of doing something. OK - just thinking out loud - if a fund thinks market is overvalued and only makes sale transactions in a year, its turn over is zero. Next year, if it only makes purchases, its turnover is zero again. So, if we have frequent corrections and overshoots, turn over can get distorted. Also, a rising market makes the denominator bigger and a falling market has the opposite effect. But if a fund experiences only purchases (w/o any sales) - heavy inflows - then makes sense to say turn over is zero. What tripped me in that definition was picking only long-term transactions / assets. Seems like, overall, the bias is to dampen turnover #. Not sure why there is a preference for low turnover - I am sure somebody must have done studies on it. The other thing that tripped me was the use of ‘purchase costs’ - now I understand it means purchase amounts and I think their use is more appropriate.
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Post by yogibearbull on Jan 13, 2021 13:15:08 GMT
anitya : " P.S.: The fund defines portfolio turnover as "The lesser of fiscal year 2019 long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities." What the heck does it mean?" That is the standard definition of turnover found in fund prospectuses. So, if a $1 billion AUM fund bought/sold $100 million and sold/bought 150 million, turnover is min [100, 150] / 1,000 = 0.10 or 10%. I find this strange too. In my own portfolio, I add buys and sells and call that my portfolio effort. If I use that for above fund example, that would be [100 + 150] /1,000 = 0.25 or 25% of doing something. OK - just thinking out loud - if a fund thinks market is overvalued and only makes sale transactions in a year, its turn over is zero. Next year, if it only makes purchases, its turnover is zero again. So, if we have frequent corrections and overshoots, turn over can get distorted. Also, a rising market makes the denominator bigger and a falling market has the opposite effect. But if a fund experiences only purchases (w/o any sales) - heavy inflows - then makes sense to say turn over is zero. What tripped me in that definition was picking only long-term transactions / assets. Seems like, overall, the bias is to dampen turnover #. Not sure why there is a preference for low turnover - I am sure somebody must have done studies on it. The other thing that tripped me was the use of ‘purchase costs’ - now I understand it means purchase amounts and I think their use is more appropriate. I think that rationale for formal definition of turnover may be that fund flows that increase or decrease fund AUM don't count for turnover. Securities with maturities shorter than 1 yr are excluded. But it looks imperfect definition to me. SEC Form N-1A has details on pg 27. www.sec.gov/about/forms/formn-1a.pdf
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Post by chang on Jan 20, 2021 8:48:26 GMT
Anyone noticing that China region funds are doing well in 2021. chang ⟮chang⟯, MATFX forward P/E is 35 as of September 30, 2020 - per fund site. Since then, the fund has returned 33%. The fund's exposure to Technology (15%) is the lowest one would find in a growth fund. Seems the contribution to high P/E is primarily from other sectors as well. You raise an interesting point. One of the "growthier" international funds is VWILX with a P/E of 38, but a technology sector weighting of only 13% (vs. the category average of 18%). There are a number of examples of foreign growth funds which are very heavy in consumer products and services companies. The "growth = technology" (QQQ) feature appears to be principally a U.S. phenomenon.
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Post by anitya on Jan 20, 2021 16:58:18 GMT
Are your P/E comparisons of the two funds from the same source and as of the same date? Sorry but data sources should be stated in most cases, unless the data, like total return, can be easily verified.
Growth does not have to be only in technology. There is growth sectors and then there are growth companies. E.g., Market does not treat current Cisco does not treat as a Growth company. Similarly, TikTok, Moderna, MJ, etc can be growth companies.
In replying for public view, I think a full post should be quoted and the object of comment can be bolded / underlined / italicized to show the sentences the target of the comment. This prevents others from mis-construing / mis-understanding. If the reply is meant for the benefit of only one person, then a private message can be used and what form the reply takes is between the two people.
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Post by chang on Jan 20, 2021 18:59:35 GMT
I only noted one P/E, for VWILX, and the source was Vanguard's page for the fund, which was linked in the post above. It may or may not be from the same date as the MATFX data you noted earlier, but that doesn't really matter. My observation was essentially a qualitative one.
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Post by anitya on Jan 20, 2021 22:21:47 GMT
I only noted one P/E, for VWILX, and the source was Vanguard's page for the fund, which was linked in the post above. It may or may not be from the same date as the MATFX data you noted earlier, but that doesn't really matter. My observation was essentially a qualitative one. BTW, the hyperlinks in ProBoards are not user friendly. They are not underlined and the font color is not much different from the rest of the post. So, it is not easy to see hyperlinks unless one sweeps the text with their cursor - no such luck on an iPad. I sure did not even know you included hyperlinks. Let me know if there is a better way to detect them. Your VWILX stats are from 12/31/2020 and from Vanguard website. As I mentioned in my post, the MATFX stats are from 9/30/2020 and from Mathew website. We all know there is no single standard everybody follows in calculating E in P/E. Comparing two funds' stats at different dates and from different sources could end up being red meat for trolls which is what you are trying to avoid on this site.
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dh
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Post by dh on Jan 24, 2021 10:41:36 GMT
Hello everyone, glad to resource you all once again. Thanks to Chang for this support. I am currently impatiently waiting for a dip to add to foreign/China. Just looked at TRCLX- interesting. Have a smallish holding of MAPIX, along with ARTKX. I can't see any long term negatives to China but hesitant to buy after this run up.
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Post by javajoe on Feb 4, 2021 12:55:30 GMT
Caution from Andrew Foster in his latest commentary.... www.seafarerfunds.com/funds/ogi/portfolio-reviewNowhere are valuations more problematic than in China, where wide swathes of the stock market are engulfed in an extreme financial bubble. To be clear: not all stocks in China are in a bubble – the market is vast, with thousands of listed companies, and consequently it is possible to find many stocks that are reasonably priced, and some that might be favorably priced. Yet most technology stocks (software, semiconductors, internet, online services and media) and consumer stocks (food, beverages and many discretionary goods) are now priced beyond perfection. The fallacy that currently prevails is that most every stock in these industries is a long-term “winner,” and that many companies will emerge as “champions” for the nation – even as many produce tepid growth and mediocre financial performance (and some are loss-making). Certainly, a few winners will emerge over time in China, some might even be competitive enough to expand abroad, and thus some will one day deserve the “champion” moniker. Yet picking such stocks out from the rest now is exceedingly difficult, and so investors appear to have given up on the attempt: they have priced stocks in these sectors as if they were all dominant, long-term winners and champions, even though such outcomes are mutually exclusive. Investors have spun a giant bubble, where unworthy companies lay claim to valuations worth tens and hundreds of billions of dollars, in a fit of hubris and an excess of liquidity.
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Post by chang on Feb 5, 2021 1:55:49 GMT
I remember well Foster's 2Q20 letter where he summarized his mistakes during the March 2020 crash and stated that he planned to raise cash ... which I thought made no sense *after* a crash, and I posted/asked on M* whether or not he was closing the barn doors after the horses has already bolted.
However, I do consider Foster to be one of the smarter guys out there, an original thinker and a worthy contrarian. His G&I fund is now very value-tilted and remains (IMO) a good vehicle for anyone who believes in Grantham's EM Value story. I have held the fund for several years and added to it last month.
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Post by javajoe on Feb 5, 2021 2:23:41 GMT
Same. I have been steadily adding as well. I do like that even though he is a traditional value hunter, he has kept his cash % fairly low since inception, and generally speaking has been willing to admit when he was wrong/early/late etc AND made the appropriate course corrections, over time. I've owned it since he left Matthews.
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Post by Norbert on Feb 5, 2021 5:14:46 GMT
Another choice might be the Matthews China Dividend fund MCDFX. Its P/E is certainly attractive when compared to the more growthy choices.
On SFGIX, its mediocre long-term CAGR is a concern for me, given that the ride has not been very smooth (unlike Foster's old fund MACSX). SFGIX has often gained less or lost more than, say, the Matthews dividend focused funds. Foster writes well, but has so far not delivered.
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Post by Karen on Feb 5, 2021 13:17:14 GMT
Norbert , That's a very good post and so true. My husband remembers when SFGIX opened and was all the rage of many investment forums and some brokerages. We never owned it and we're glad we have not. So many other great emerging markets options have come into focus in recent years that he had all but forgotten about SFGIX. Thanks for reminding us! My conversation with him about SFGIX actually brought back some great memories of his about one of his former clients. Anything that helps in that regard is immensely appreciated!
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