Vanguard offers SMSFs increased access to China
Vanguard has broadened the diversification of the Vanguard FTSE Emerging Markets Shares ETF (ASX code VGE), enabling SMSF investors to have an exposure to China A-shares.
The fund has expanded from using the FTSE emerging index only, which contained large and mid-cap securities, to include the FTSE Emerging Markets All Cap China A Inclusion Index.
Vanguard's head of investments for the Asia Pacific, Rodney Comegys, told SMSF Adviser the changes to the benchmark will offer SMSF investors two forms of diversification benefits, with the addition of small caps stocks and China A-shares.
“Historically foreign investment in mainland China has been limited and regulated, but the market has started to become more accessible,” said Mr Comegys.
Home country bias, Mr Comegys said, can be a source of risk in SMSF portfolios, and international diversification can help reduce that risk.
“For those who choose to include emerging markets in their portfolio, VGE now provides exposure with the simplicity of a single trade on the ASX,” he said.
Vanguard said the change was made possible by the China Securities and Regulatory Commission (CSRC) and State Administration of Foreign Exchange (SAFE).
In recent months, Vanguard said the CSRC has granted Vanguard, through Vanguard Investments Australia, a Renminbi Qualified Foreign Institutional Investor (RQFII) licence and SAFE approved a quota to invest.
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.