Letters | Cryptocurrency ETFs in Hong Kong? Let’s walk before we can run
- Readers discuss what products are suitable for individual investors, and the prospect of interest rate cuts
Vanguard, the American fund management company, used to have a range of low-cost passive ETFs in Hong Kong investing in global markets. But they moved out some years ago.
The main reason, I believe, is that they would not pay commissions to banks and insurance companies to sell their funds. There may be other reasons. This is a problem across Asia where investment products are “sold, not bought”. In other words, distributors of financial products dominate over the producers and users of such products.
I used to invest in Vanguard’s ETFs in the Hong Kong stock market. After Vanguard moved out, I am now paying higher investment management fees on equity funds run by a Hong Kong-based company.
So, what are my issues?
Can Hong Kong Exchanges and Clearing encourage more low-cost ETFs to be listed on the Hong Kong stock exchange?
Can HKEX (or whoever) launch a programme to teach investors the benefits of such low-cost products? For example, low-cost investment diversification.
Can these products embrace global equity/bond markets? Can these plain vanilla building blocks of investment be prioritised over cryptocurrency?
Is cryptocurrency a suitable investment for Hong Kong individual investors at this time? Is it suitable for Occupational Retirement Schemes and the Mandatory Provident Fund?
The Hong Kong financial authorities should stand up to the tyranny of the banks and insurance companies who want to maximise their distribution fees. ETFs, with much lower fees compared to active managers, arguably represent the democratisation of money. Excess fees paid to distributors detract from the investment returns that would otherwise accrue to investors.
Retail investors, particularly, need to be protected from dubious products.
Nicholas Rogers, Mid-Levels
Don’t count your rate cuts before they hatch
When the markets outpace economies, eventually investor euphoria will end and the bubbles will burst.
Rishi Teckchandani, Mid-Levels