Asia shares belong in every portfolio

Asia shares belong in every portfolio

Meanwhile I see my center of life more in Asia than in Europe. On the pulse of time, as the saying goes. This fits very well with the Asian situation. Here life is pulsating and you can feel the Dynamics and the growth. This is where I want to be, this is what I want to participate in. Although Asia is very livable and offers something for practically everyone, it is still not for everyone. Climate, mentality, culinary, traditions and also completely foreign things are here. You have to be ready for new things and for change.

In my article today I would like to take a look at Asia’s opportunities and how we as investors can profit from it. But we can also expect a completely different culture in the economy, and we cannot assume that we will be able to invest 1:1 in the same way as in Europe or America. But there is a solution for everything. An old Chinese proverb is helpful here: "It is better to stumble a little on new paths than to tread water in old paths."

Asia is closer to us than we think

Few have ever traveled to Asia. This continent is too far away and traditions and ways of life often seem too abstract here. Yet Asia is in many ways omnipresent to us Europeans. Just because of low labor costs, everyone finds some connection to Asia. Whether it’s the latest smartphone, cheap plastic products, or simply over 80% of the things we use in our daily lives. Asia is the workbench of the world.

Asia, especially China, is often seen in our society as a Cheapheimer’s perceived. Much of what comes from Asia cannot keep up with the usual quality standards – at least that is the unanimous opinion. But Asia can also be different. iPhones and iPads, as well as countless other branded products from various manufacturers such as Adidas and Co. are produced exclusively in Asia. Here the quality appears to be satisfactory. However cheap or inexpensive one looks here in vain. Asia rather stands for: You get the quality you order and pay for. Everything is possible.

Which Asia are we talking about anyway?

When we talk about Asia, we often mean countries from South Asia, East Asia and South-East Asia. The countries that still belong to the emerging markets and focus on enormous growth potentials sitting. In some cases, the opportunities for development are so huge that in our world, the sheer size of the future economic output cannot be grasped at all. Simply because we cannot put such magnitudes into perspective and also because for years Europe has only been budgeting and bureaucratizing itself. There has not been a dynamically growing development for a long time.

I would therefore like to concentrate on the above-mentioned regions in my article today. Near East in the more Arabic area or also Central Asia with the parts of the former USSR are here times excluded. A little bit casually formulated you could say: Everything from India to Japan!

The global economy is on the verge of a turning point: Asia is about to finally take the lead in global competition. The continent that is home to more than half the world’s people is taking the lead as a technology champion – flanked by the new Silk Roads, one of the most ambitious infrastructure programs in human history.

Asia expert Karl Pilny takes us inside this new economic miracle and explains who the new powers in Asia are. Pilny’s conclusion is vivid and evidenced: A multipolar world is emerging in which four of the five most powerful and wealthiest countries will soon be Asian countries.

Publications by Karl Pilny Karl Pilny has already been a guest on Echtgeld.TV. He speaks at Tobias& Christian on the rapid development of the Far Eastern countries and provides a deep insight into the experience he has gained on the ground over the past three decades. He goes into the highly interesting historical context and, against this background, highlights the opportunities and risks of the Asian markets today. Therefore: Eyes and ears open, who would like to enrich its depot with values from China and Japan or also India and Indonesia!

China is no longer a distant threat, China is here! Politically and economically. The Middle Kingdom is ambitious, fast and well organized, it is as innovative as Silicon Valley and increasingly determines the international rules of the game. China is focusing on growth and digital technologies and does not dwell on the Western model of democracy. On all continents, it invests in mineral resources, key industries and infrastructure – even in our country. China expert Frank Sieren shows first-hand where China is directly challenging us and what the new world power means for us: both opportunity and threat.

Publications by Frank Sieren The world is reordering itself! But who will take power in the future? China expert Frank Sieren has a clear opinion: China will be number one – and will dominate us in the future! Whether in artificial intelligence or electric mobility – the future belongs to China and not to Silicon Valley! But how dominant will the Middle Kingdom be? Do we have to be afraid of the authoritarian superpower?? And what speaks against China’s unchecked rise?? Sieren answers all these questions in this interview.

Let’s go back to 1970. If you look at the list of global economic powers at the time, the USA and countries from Europe dominate here. The only Asian representative was Japan in third place. The next Asian state followed only on place 7 – China. While the U.S. ranks first with a gross domestic product of 1.073 trillion, followed by Germany (USD 215 billion). USD) and Japan (212 billion. USD) in second and third place, not even together to half the US value. With 92 billion. USD just ahead of Canada and does not even reach 10% of US economic strength. India in 9th place rounds out the Asian participation in the top 10. Indonesia follows in 32nd place.

In 1990, a good twenty years later, the list still looks very similar. Japan has risen to second place (USD 5.8 trillion) and is almost on a par with the USA (USD 5.9 trillion). Germany is in third place by a wide margin (USD 1.6 trillion) and Japan is even the only Asian representative in the top 10 in 1990. China follows only in 12th place with 398 billion. USD ahead of India in 13th place (326 billion. USD) and South Korea in 17th place (288 billion. USD).

Again twenty years later, China is in second place behind the U.S. (15 trillion USD) (12.6 trillion USD) and ahead of Japan (5.7 trillion USD). Germany, with USD 3.4 trillion, is still in fourth place. India is in ninth place (USD 1.7 trillion), South Korea in 14th (USD 1.1 trillion) and Indonesia in 18th (USD 755 billion). USD).

There are currently 4 Asian countries in the top 10

The latest figures from 2019 already point to a new economic world order. The Asian countries are catching up very strongly! China, Japan, India and South Korea are already in second and third place four economies among the world’s largest. Another five emerging economies follow in the top 25 nations.

The development shows very well that Asian countries in particular have worked their way up the rankings in recent decades. Whereas in the past only Japan played a significant role, and Germany was still a world leader, have propelled numerous Asian nations into the economic upper echelon with enormous growth rates, inevitably overtaking other nations.

Thus, from 1970 to today, the value of the USA has increased from 1.073 trillion to 21.433 trillion multiplied by 21. Japan (x23) and Germany (x18) are at a similar level. China, on the other hand, has increased its gross domestic product from 0.092 trillion to 13.3 trillion, a 145-fold increase. The situation is similar for Indonesia (x113), Taiwan (x103) and also South Korea (x191). Even the Philippines (x50) and India (x44) have a significantly stronger growth than the USA.

If we take into account past trends and extrapolate them for the future, we will have Germany will soon lose its fourth place and will continue to be pushed down in the coming years.

The catch-up effect and the start of globalization

While companies from the western industrialized countries have to take care of the pioneering work to develop more efficient products and new services, it is correspondingly easier for the developing countries to use existing resources, developments and conditions and to grow based on them. In this respect, this Catch-up effect of Asian countries In view of globalization and the associated worldwide networking and digitization, this is quite logical. People who start running today will be able to improve much faster than Usain Bolt, for example, who holds the sprint world record and has little chance of breaking it again.

One elementary point, however, is that the growth curve is not scalable. Already established states such as the USA, Japan, Germany as well as France and many others, are stagnating in growth because they have increased by a Comparatively old society need to take care of. The care of the elderly by the young has been a hotly debated topic for a long time. The demographic pyramid in Germany is most pronounced in the age groups from 40 to 60 (23.6 million).) and older (23.7 million.). The group of people up to the age of twenty is only 16.2 million. and that of the 20- to 40-year-olds only 19.6 million.

Developments in the coming decades show the real problem. If we extrapolate today’s values 20 years further, the distribution of today’s 20- to 40-year-olds and 40- to 60-year-olds shifts further to the right. In the 20- to 40-year-old age group, only around 9 million people will be. people to. So while today the ratio of people capable of working (20 to 65 years old) to pensioners is around 49 million. to 18 million. and a ratio of 2.72 can be calculated from this, this will shift to 23-28 million in twenty years. pensioners to 28 million. able-bodied people. The ratio is changing toward a value of 1.0 to 1.2.

The problem with the age pyramid

If we compare this with the Age pyramid of Asian countries the opposite development of the distribution is noticeable for the most. The only exception here is Japan, which has to contend with an increasingly aging distribution while the birth rate remains constant. In countries such as Indonesia, South Korea or even Taiwan, it is noticeable that the "belly" is located much further down in the distribution.

The reasons for this are certainly manifold, but Karl Pilny describes this in his book very simply and understandably. Economic growth and the resulting stronger economy are creating more and more wealth. The People evaluate their livelihood as more secure and see future prospects. This in turn leads to them starting families and thus initiating a cycle that provides young offspring who will be available to the labor market in 20 years’ time.

The trend in Germany, as well as in other European countries, has been downward for decades. An economy that has been weakening for years, in relation to global development, leads precisely to uncertainties, to pessimistic outlook for the future and thus automatically to lower birth rates. While the proportion of people under 20 in Germany has fallen from 30.4% in 1950 to 26.8% in 1980, the figure has been steady at 18.4% since 2010. On the other hand, the number of people over 60 years old increased from 19.4% (1980) to 28.5% in 2019.

A high level of prosperity also leads, among other things, to a further increase in life expectancy. Better living conditions as well as advanced medical care already ensured that the Life expectancy in 1950 from 64 and 68 years (males and females) to 79 and 83, respectively, in 2020. Life expectancy increased by 15 years within 70 years. Statisticians assume that in 2060 we will live with a life expectancy of 84 or. 88 years can go out.

Asia has advantages here which Europe can compensate only with difficulty

If one takes an objective look at the figures for these expanding economies with their significantly younger populations, one must ultimately conclude that the Asian countries have been given a significantly more powerful future lies ahead. While the society in Germany as well as in Europe is determined by more and more old people, who are finally no longer available as working people, the Asian countries offer a clearly higher potential due to their growing prosperity and the resulting population explosion.

Now still exist today great differences between European and Asian prosperity. The gross domestic product per capita in Germany sees the World Bank in 2019 in its survey in 26th place with a value of 46.258 USD. Indonesia is here just 4.135 USD, Thailand at 7.808 USD, Malaysia at 11.414 USD and China only at 10.261 USD.

At the first moment you might think that the distance is impressive and sufficient. But if you look at the time course you will see that the Asian countries have a very steep, highly progressive curve. Europe, on the other hand, has been stagnating since 2005 and the level has been falling slightly since.

The development can no longer be stopped – neither in Asia nor in Europe

Germany and Europe have an obvious problem, which can undoubtedly be solved with an early and intelligent Immigration Policy could have been solved. For years, the unsuccessful, practical implementation of this theme has led to a very divergent political discussion and prosperity development. What finally also explains, why since some years above average many people turn their back on Germany. It’s mostly the high achievers and not the economically weak.

In general, it is noticeable that Europe, and thus also Germany, likes to sink into a sprawling bureaucracy and high taxes. To this end, foregoing tax incentives for companies and small and medium-sized businesses, and increasingly posing as the Social welfare office of the world on. Furthermore, people prefer to discuss problems instead of tackling them and solving them pragmatically. Thus, EU-wide Thousands of pointless regulations and for decades is built at stations and airports, while other countries stamped one of the largest airports world-wide in four years from the soil. The new airport in Beijing is thereby almost five times larger than the new and in the meantime nevertheless again old Berlin airport BER.

Asia is also pursuing a completely different philosophy than the Europeans. Karl Pilny described this in his book as follows: The sheer mass of engineers compared to the Western world (up to 10 times), will mean that products of similar quality as in Germany can be produced in double quantity at half the price in China and exported from there to the whole world. This certainly still sounds unrealistic, but if only a large part of it occurs, it changes everything.

One thing is clear: I want to be there!

In first part of my article I have tried to go into the main subject matter. This point is enormously important to understand yourself that a rethinking must take place. We can no longer wait for things to change in our world. We must Go where the opportunities are – if not in the flesh, then at least with our investments. Who has recognized the possibilities and wants to participate here in the future, must begin to take up the new world also in its depot.

By the way, Karl Pilny sees great opportunities in agriculture due to industrialization and thus extraordinary opportunities for the agricultural, food and packaging industries. Just getting food to huge populations poses major challenges. The Growing affluence has already picked up a tremendous pace and will thus also boost the banking sector. Pilny sees further dynamic opportunities in the areas of environmental technology, renewable energies, cleaning technology, filter systems, sensors, water treatment plants, medical technology, regional energy, and networking and robotics, for which Taiwan, for example, offers a very good investment landscape.

At second part of the article I would like to talk about how you can invest sensibly in Asia. Again, true to my dividend strategy, I like to focus on healthy and expanding companies and buy them when they are undervalued. In addition, I expect a solid dividend continuity here as well. And there we directly encounter the first problems. Good payout histories, regulated markets or even transparent company insights are not common in the Asian world.

Especially large and well-known market leaders from the Western world sometimes find it easier to gain a foothold in Asia through joint ventures or takeovers of Asian companies. So the search for stocks is by no means limited to purely Asian stocks, but equally includes global companies with a dynamically growing Asian business. But let’s try to get a first picture and look for solutions how we could nevertheless invest effectively in Asia.

Simply invest in Asian stock markets?

The usual way can be to look at Asian indices and search for interesting companies. I would start here to sort according to the market capitalization and to pay attention the greatest values of each country to look at. find such exciting companies and at some point make the decision to place an order, you quickly realize that in practice it’s not so easy or. some things have to be considered.

Liquidity and tradability Are not always given. Globally known stocks like Alibaba, Tencent or Xiaomi are less of a problem here. It becomes more difficult with values which, for example, can only be traded on Asian stock exchanges and in the local currency. Here, many brokers lack access to Asian exchanges or trading involves higher fees. In any case, this often requires a special broker.

A first port of call are Brokers set up around the world like Interactive Brokers as well as their introducing brokers LYNX or CapTrader. They provide access to major Asian markets such as the Shanghai Stock Exchange Composite Index (SSE), the Chinese Securities Index 300 (CSI300) or the Hang Seng Index (HSI). Here are aggregate trades of the most liquid stocks from Asia in different categories. Altogether these are after all nearly 2.000 titles.

A-shares, B-shares, H-shares and ADRs

When trading Asian stocks outside of Asia, when choosing especially to pay attention to the share class. As A values one understands those values which are listed and traded on the stock exchanges in the home currency. With an appropriate domestic broker, it is now also possible for foreign investors to trade these values. However, if you are not on the spot to open a securities account, you will not be able to use this option.

As B values The shares that are traded on the stock exchanges in Shanghai and Shenzhen in foreign currency are titled "Asian shares". They can only be traded by foreign investors there, with the currency being either USD (Shanghai) or HKD (Shenzhen). In Shanghai, there is even a separate index for this, the SSE B Share Index. Similar to the B values, the H-values those traded on the Hong Kong stock exchange in HKD.

A frequently encountered alternative are the so-called American Depositary Receipt, short ADR. While the aforementioned shares all mean ownership of a share in foreign currency, the ADR is merely a financial instrument, a kind of certificate. This entitles to buy a share, but is in no way a direct participation in the company. These are sometimes also traded on US stock exchanges.

Withholding tax in Asia

Withholding tax plays a role in Asia, of course. Similar to well-known Western countries, such as France, Switzerland, Spain and Canada, one should also make sure that incoming dividend income in Asia is not excessively linked with higher withholding taxes be documented. It is important here that the withholding tax paid, if possible, can be credited in full against German tax. Everything else only reduces the earnings yield.

Therefore, it is also important to pay attention to the withholding tax when investing in Asia. A first point of contact should always be the Federal Central Tax Office. Annually all countries are listed and updated here. You can see how high the withholding tax burden will be and how much of it will be credited against German tax.

Accordingly, Hong Kong, Malaysia, Singapore and Vietnam are of particular interest to me, as they are all 0% withholding tax on dividends levy. Furthermore, withholding taxes of up to 15% are acceptable if they are fully credited. The Philippines, Indonesia and Cambodia take a back seat for me with tax deductions of more than 15%. It therefore makes sense to check the issue of withholding tax on dividend income in the list of the German Federal Central Tax Office before making an investment.

The problem with stock selection

With my dividend strategy, I look for market-leading companies that, among other things, have a high dividend continuity and have a certain entrepreneurial history. In a still young Asian market, the selection of suitable dividend stocks is therefore somewhat difficult.

Asian leaders with global exposure and solid dividend history ala Procter& Gamble, AbbVie, Exxon or AT&T are difficult to identify. In the broad stock market press known to us, the focus is usually on the rapidly expanding Asian stocks, which are usually still very young and usually do not even pay a dividend.

A look at the long history of dividend aristocrats quickly shows the difference. Dividend histories in America sometimes go back up to 100 years and more. There is simply no comparable stock in the Asian region, because, as reported in the first part of the article, the economies have only developed expansively in the last two or three decades. And during such a boom period, the focus is usually on strong growth and less on dividend payments.

In this respect, I would like to present different values in the further course that are eligible for an investment in Asia can. The focus here should also be on a high market capitalization and the companies should also have a reasonable dividend history.

I distinguish here between three different investment options. Direct investments in Asia, investments in single stocks with a high Asian share and finally also the possibility to increase the Asian share in the portfolio by means of distributing ETFs.

Direct investments in Asia

At this point, I would like to briefly present individual values by way of example only. This should show what interesting stocks can already be found in Asia and that it is worthwhile to look for them more closely. There are many more exciting companies and in the next weeks and months I will add more companies to the dividend alert list. Dividend alert members are welcome to send me suitable suggestions. Important would be a market capitalization in the billion range calculated in USD or EUR, as well as a solid dividend payment in recent years.

Taiwan Semiconductor Manufacturing – one of the largest semiconductor manufacturers

Country: Taiwan
WKN: 909800
ISIN: US8740391003
Investor Relations
TraderFox Stock Terminal
TSMC is active in the semiconductor business and produces along the patents of many well-known companies. Founded as a joint venture, it is now one of the largest semiconductor manufacturers in the world. With a market capitalization of around 50 billion. USD, TSMC is a heavyweight in the market and, as an established company, has also paid a dividend for many years. Revenue growth has been at a comparatively low level for a number of years, which at the same time is causing stagnation in earnings.

Anta Sports – Competition for Adidas and Nike

Asia shares belong in every portfolio

Country: China
WKN: A0MVDZ
ISIN: KYG040111059
Investor Relations
TraderFox Stock Terminal
Anta Sports from China was founded in 1994 and is mainly active in the apparel and textile sector. The company is probably known to at least some of us. Some brands, however, have. Since the end of 2018, Anta Sports has owned the manufacturers of Wilson tennis rackets and Atomic skis, among others. It can be assumed that the Chinese will continue to grow dynamically in the future by acquiring additional brands.

Meanwhile, the company reaches a market capitalization of 35 billion. USD, generates higher sales than Adidas and pays a dividend, although not with good continuity. 2019 were expected to be around 30.38.5 billion in sales with a workforce of more than 000 employees. USD revenues, of which 6.0 bn. USD left as profit. This speaks for a profitable business model. Looking at the sales growth over the last 5 years is impressive. Sales could be increased by an average of 30% per year. Adidas could "only" grow 10% in sales per year in the same period. Nike, as one of the largest players in the market with a capitalization of 215 billion. USD, could only increase its sales by 4% per year. In this respect, Anta Sports is definitely a stock that can keep up with the big players in the industry.

DBS Group – A banking group for Asia

Country: Singapore
WKN: 880105
ISIN: SG1L01001701
Investor Relations
TraderFox Stock Terminal
With HSBC, I already have a bank in my portfolio that has a very strong Asian business. DBS Group, on the other hand, is even more focused and present in 18 Asian markets. The Singapore-based company specializes mainly in small and medium-sized enterprises and in 2002 launched the first REIT in Singapore.

A look at the picture-book chart of business performance, similar to Anta Sports, gives a glimpse of a very qualitative company. With sales (2019) of 21 bn. USD, a profit of 6.3 billion. USD will be achieved. For comparison, HSBC generated a much higher revenue with 74 billion. USD, from which, however, they generated a significantly lower profit of only 4.8 billion. USD could achieve.

CK Hutchison Holding – the largest conglomerate on the Hong Kong Stock Exchange

Country: Hong Kong
WKN: A14QAZ
ISIN: KYG217651051
Investor Relations
TraderFox Stock Terminal
CK Hutchison Holding is more of a conglomerate and divided into five core businesses: Seaports incl. of related services, retail, infrastructure, energy and telecommunications, thus operating in over 50 countries with its 300.000 employees.

Its infrastructure holdings include everything you can think of. Water, gas networks, ports, parking garages and power grids. In 2019, CK Hutchison Holdings’ mobile phone holdings alone (3Group as well as Hutchison Telecommunications Asia& Hong Kong) a total of over 90 million customers. A well-known German investment is also included. About the retail chain AS Watson Group (16.000 stores in 27 countries), they hold a 40% stake in the German drugstore chain Rossmann.

There are many more interesting companies

At this point, I just wanted to briefly highlight some special values by way of example. The partly rather unknown companies, are already very strong on the way and sometimes achieve better results than comparable companies that are known to us investors. This offers the first opportunities to fill up certain categories with Asian individual stocks. But there are many more candidates and I would like to gradually include interesting Asian stocks in the dividend alert as well.

If you want to look for other interesting companies, you can’t avoid doing some major research. A start could be the list of the largest companies in Asia. But there are also comparable lists on individual countries such as Singapore, China, other countries or even regions such as Southeast Asia.

Investments in individual stocks with a high Asian share

Another way to increase one’s Asian share in the portfolio is offered by companies that already have a strong presence in Asia but are headquartered in another part of the world. Preferably, these can be companies with a high Market leadership in its sector or globally known brands.

One such company is the globally active HSBC Bank. Its origins even lie in Asia. It specializes in financing growth markets, and in 2019 its Asian business contributed around 80% to the company’s success.

If you fly around the world to a place you’ve never been before, Coca-Cola and McDonalds are usually there by now. Global expansion has been going on for many years and so has McDonalds for example, after the USA, the most branches in China and Japan.

Economic upswing means prosperity. In this respect, it is hardly surprising that the luxury fashion house Hermes now generates almost 60% of its sales in Asian countries. The strongly increasing sales match the increasing GDP of the countries, whereas the sales in Europe and the USA are falling significantly.

Prudential plc, a British insurance company, earned nearly 90% of its revenue in Asia in 2019. Due to the Corona pandemic, this share decreased in 2020, although the Asian business remains the main source of revenue.

Absolutely is at the place also Siemens to be named, which are pioneers in many places of activity in Asia. At almost 25%, the share of sales accounted for by the Asian business is, however, still significantly lower than that of the companies mentioned above. Looking at the general revenue distribution at Siemens, only 16% is generated in Germany.

The Carl Zeiss Meditec also growing for years thanks to strong Asian business. With a share of around 40% of sales, the focus is immediately apparent, especially since higher-margin products are more popular in Asia than on the global market. Consequently, the larger share of the margin for medical products in the Asian region also arises.

ETFs as an alternative to give Asia a higher weighting in the portfolio

Even if I have separated from my ETFs in 2018 – you can read this again in this article – it offers itself especially for the topic of Asia to increase its portfolio share for this region in the breadth by means of ETFs.

It is often difficult to obtain transparent information about the company. In part, state-directed capitalism also stands in the way. Free market economy is often defined differently in Asia. On the one hand, Asian companies benefit from strong political backing, but on the other hand this can bring disadvantages for foreign investors. Western companies in particular do not find it easy to invest and expand in China, for example, without joint ventures. Decisions must always be made here between growth and loss of know-how be weighed.

Keeping an overview here and Lulling its own investments into security, is sometimes difficult especially for us small investors. The example of Luckin Coffee (accusation: falsification of financial and operational figures) shows that one actually knows nothing about many Asian companies. It can therefore be advantageous to rely on professional and institutional investors here, as they often have far more opportunities to review and verify their investments. In addition ETFs are always a basket of many securities as well and thus significantly less exposed to the risk of individual defaults. At the same time, one participates broadly in the Asian region and one avoids the point of higher transaction costs.

Finding great ETFs with income distribution is not easy

Now you might think that it would be easy to choose two or three different ETFs with Asia theme to pick out. But it is not, especially if the focus is on a distribution. Begins one with the ETF search on the portal Just-ETF.com and selects Asia as the subject area, only 22 ETFs are found. If we then select that we want to have filtered distributing ETFs and also the fund volume should be at least 500 million euros, then no less than 2 ETFs remain. You can see the result here.

What’s left is the Vanguard FTSE Developed Asia Pacific ex Japan UCITS ETF Distributing (ISIN: IE00B9F5YL18 | +9% in 2020) and the iShares MSCI AC Far East ex-Japan UCITS ETF (ISIN: IE00B0M63730 | 14% in 2020). Those who can do without distributing ETFs or accept low fund volumes will find other ETFs in their search. All in all, it is not easy to find suitable and successful ETFs that meet most of the desired criteria. Nevertheless, I would like to introduce three ETFs to you by way of example.

SPDR S&P Pan Asia Dividend Aristocrats

ISIN: IE00B9KNR336 | -9.5% in 2020 | Just ETF Profile

The Aristocrat-themed ETF provides access to stocks from the Asia-Pacific region whose dividends have increased for the last 7 consecutive years. Overall, the ETF is unfortunately not particularly strong with a volume of 170 million USD. The Total Expense Ratio (TER) of 0.55% is in an acceptable range for an ETF, especially if you have few alternatives. On the website of the ETF provider you can find the latest composition of the individual stocks in the download section.

Christian W. Rohl previously featured this ETF in his book Stay Cool and Collect Dividends. However, he correctly corrects there that the concept of Dividend Aristocrats has been defined differently for this ETF and the entry hurdles have been lowered from 25 consecutive dividend increases to 7 years. However, a look at the ETF composition shows that half of the ETF Japan (30%) and Australia (22%) were invested. China is represented with 11% and Hong Kong with 20%. Taiwan follows with 6.3%, and Singapore with 2.8%. The remaining 10% are distributed almost equally among India, Indonesia, Malaysia, Philippines, South Korea and Thailand. The composition offers relatively little of the new Asia. In addition, the fund volume is very small and the 5-year performance of 32% is only mediocre.

iShares Asia Pacific Dividend UCITS ETF

ISIN: IE00B14X4T88 | -17.8% in 2020 | Just-ETF Profile

This quite well-known ETF offers access to the 50 highest dividend-paying stocks from the developed economies of the Asia-Pacific region. The ETF recently produced a distribution yield of 3.5% and has a different allocation than the previously mentioned Aristocrats ETF. 40% invested in Hong Kong, 23% in Australia and 19% in Japan. Singapore as a financial metropolis plays a bigger role here with another 11%. However, China and New Zealand almost go down with the remaining percentages with it. A really high Asian share is also missing here. When looking at sectors, finance dominates with 32% and real estate with 21%. The ETF has a volume of about 314 million. USD and the TER is 0.59. The performance of the last 5 years is incl. of the distributions only a meager 9.4%.

iShares MSCI AC Far East ex-Japan UCITS ETF

ISIN: IE00B0M63730 | 12.3% in 2020 | Just ETF Profile

The MSCI AC Far East ex Japan Index provides access to the equity markets of the developed and emerging markets of East Asia, but excludes Japan. The ETF has a volume of almost 2 billion. EUR comparatively large. Its distribution yield, however, is only about 1.15% and the TER is a higher 0.74%. The fees effectively eat up the payout.

In terms of composition, however, this ETF comes up with really a lot of Asia: China 43%, 16% South Korea and 16% in Taiwan. Other countries are Hong Kong (8%), Singapore (2.7%) and Thailand (2.4%) and a small part Indonesia and Malaysia round up the ETF. The sector distribution is forward-looking with 22% IT, 21% financials and 13% communications. 20% of the ETF is invested in consumer cyclicals. Somewhat confusingly, there is a 6% allocation from Ireland. However, this results from a share in the MSCI China A ETF, whose fund domicile is in Ireland. While the ETF does not offer a high payout, it does offer very good Asian diversification and a good 5-year performance of 65% including distributions. Currently my favorite, even if the cost is above average.

An investment in Asia is an absolute must

Who the book Asia 2030 will inevitably come to the conclusion that the future of the global economic boom will take place in Asia. The development is not just coming, it has already been going on for years.

The above selection of investment opportunities shows that a) there are enough options to participate in the development in Asia and that b) it is not easy to bet on the right horse. In the end, it’s the mix that counts.

I too will align my new investments with all of the above. In my personal handout with which I review my stock investments, I have already added the passage that in the future I will review a company to see if it already has significant sales in Asia. A review of my current portfolio holdings is also being planned. So I can see what my current Asia allocation is by looking at suitable stocks with a high Asia allocation.

Inevitably, I will also work with ETFs for this theme and also include individual Asian stocks, especially very large ones, even if there are no real dividend aristocrats. The focus should therefore at least be on a solid and continuous dividend payment.

In the course of this article I have already included all mentioned stocks in the dividend alert. Based on the linked lists as well as the suggestions of my members, I will further increase the share of Asian stocks in the dividend alert in the coming weeks.

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