JAGI, HFEL, SOI and AAIF - exposure to China and Taiwan

[richfool]

In view of the rumblings and rhetoric arising from China re their aspirations regarding Taiwan, I was thinking what if Xi Jinping decided to take courage from mad Vlad's behaviour in Ukraine and take things further. I was therefore having a look to see what exposure the above trusts have to China and Taiwan. On the assumption that if XP took things further, besides the more immediate implications, the west would likely take sanctions against China as it did with Russia, and therefore should I reduce, or be prepared to reduce my holdings of the trusts in question?
(In size of holding order, I hold: AAIF, HFEL and JAGI.)

Looking through the country analysis of the relevant trusts on the HL website, I see JAGI has the most exposure to China at 35%, and HFEL the second highest at 15.38%. SOI has the highest exposure to Taiwan at 23.21% and AAIF the second highest at 20.77%. The figures are summarised:-

JAGI - China: 35% Taiwan 14.88%
HFEL - China: 15.35% Taiwan: 14.62%
SOI - China: 10.5% Taiwan: 23.21%
AAIF - China: 8.2% Taiwan: 20.77%

I expect much of the exposure to Taiwan will be from holdings of: TSMC (Taiwan Semiconductor Manufacturing Company).

Has anyone else considered such a scenario and what precautions they might take?

[BullDog]

I have considered this, yes. I am presently a bit under water in both HFEL and JAGI. I don't have huge holdings in them, but obviously would prefer not to crystallise a loss. Though I am definitely thinking about reducing or selling.

[CraigSB]

I hold HFEL, JAGI and also BGCG in this region. HFEL is my largest holding and also the biggest disappointment.

I recently read an article arguing how China (and Japan) could be a possible hedge against a US recession. Whilst I feel this could be a little far-fetched to say the least, it also gives food for thought, but obviously takes no account of any possible negative action by Xi as you’ve highlighted.

I will be holding (slightly reluctantly) for diversification. Whilst none of us can predict the future, do you not think the global sanctions and the possibility of a war (that could last for years) would be enough to deter Xi having witnessed the global reaction first-hand - Biden has already intimated that any Taiwan invasion would see the US become involved. As erratic as he may be, I’m inclined to believe he has a little more value for his own country’s economy, but I may be wrong - I’m no character expert. I would think if China did make a move, the negative implications on my whole portfolio would be huge, regardless of my exposure just to China.

[88V8]

I would think if China did make a move, the negative implications on my whole portfolio would be huge, regardless of my exposure just to China.

Given the idiotic extent to which we in the West have outsourced our manufacturing to China, I am sure that is true.

I hold a fair chunk of HFEL, underwater. I don't think I'd sell because of possible Chinese invasion plans, but I'm sure there is something better I could do with my money.

V8

[Dod101]

I would think if China did make a move, the negative implications on my whole portfolio would be huge, regardless of my exposure just to China.

Given the idiotic extent to which we in the West have outsourced our manufacturing to China, I am sure that is true.

I hold a fair chunk of HFEL, underwater. I don't think I'd sell because of possible Chinese invasion plans, but I'm sure there is something better I could do with my money.

V8

Why anyone holds HFEL I do not know, even if they were invested in Florida. They can produce big dividends but lose much of them in their capital losses. What on earth is the point in that? I hold only SOI of those mentioned by the OP and am happy with that. I am not going to try to second guess Schroders as I think they have a better eye on the investment opportunities in the Far East than I do nowadays. I have never liked Henderson (now Janus Henderson) very much and I think the investment house is important. Janus (facing both ways) Henderson.....bah!

Dod

[Itsallaguess]

Why anyone holds HFEL I do not know, even if they were invested in Florida.

They can produce big dividends but lose much of them in their capital losses. What on earth is the point in that?

I hold only SOI of those mentioned by the OP and am happy with that. I am not going to try to second guess Schroders as I think they have a better eye on the investment opportunities in the Far East than I do nowadays.

I have never liked Henderson (now Janus Henderson) very much and I think the investment house is important. Janus (facing both ways) Henderson.....bah!

The five-year total-return chart for JAGI, HFEL, SOI and AAIF is shown below for comparison purposes, with some more discrete TR data underneath to the right -



Source - https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/f/fundsmith-equity-class-i-accumulation/charts

HFEL is the clear negative outlier over a five-year period, but JAGI has been pretty poor over the past year or so.

I own JAGI and AAIF out of the four, and I've been happy with the long-term TR performance and the natural yields of both, which the last time I checked were around the 4.5% mark.

Cheers,

Itsallaguess

[Dod101]

Thanks IAAG. I am hopeless at finding these figures but it seems that Schroders O I is doing OK compared to the others which is fine by me. HFEL is clearly a problem share, although if income is all that matters......

Dod

[CraigSB]

I would think if China did make a move, the negative implications on my whole portfolio would be huge, regardless of my exposure just to China.

Given the idiotic extent to which we in the West have outsourced our manufacturing to China, I am sure that is true.

I hold a fair chunk of HFEL, underwater. I don't think I'd sell because of possible Chinese invasion plans, but I'm sure there is something better I could do with my money.

V8

Why anyone holds HFEL I do not know, even if they were invested in Florida. They can produce big dividends but lose much of them in their capital losses. What on earth is the point in that? I hold only SOI of those mentioned by the OP and am happy with that. I am not going to try to second guess Schroders as I think they have a better eye on the investment opportunities in the Far East than I do nowadays. I have never liked Henderson (now Janus Henderson) very much and I think the investment house is important. Janus (facing both ways) Henderson.....bah!

Dod

I couldn’t argue with any of that Dod - I suppose you get used to those dividends coming in and they feel hard to give up maybe? But you’re right, the performance has been poor as we’ve all eluded to. My only issue with SOI is it’s allocation (which richfool kindly posted) and it’s lower exposure to China (compared with some other funds discussed). For me personally, I would prefer to see that percentage higher because whether any of us like it or not, they are a global power. But that figure may prove to be astute if the concerns of the richfools original post transpire, but at that stage we’ll be nursing heavy losses regardless.

[Dod101]

I would think if China did make a move, the negative implications on my whole portfolio would be huge, regardless of my exposure just to China.

Given the idiotic extent to which we in the West have outsourced our manufacturing to China, I am sure that is true.

I hold a fair chunk of HFEL, underwater. I don't think I'd sell because of possible Chinese invasion plans, but I'm sure there is something better I could do with my money.

V8

Why anyone holds HFEL I do not know, even if they were invested in Florida. They can produce big dividends but lose much of them in their capital losses. What on earth is the point in that? I hold only SOI of those mentioned by the OP and am happy with that. I am not going to try to second guess Schroders as I think they have a better eye on the investment opportunities in the Far East than I do nowadays. I have never liked Henderson (now Janus Henderson) very much and I think the investment house is important. Janus (facing both ways) Henderson.....bah!

Dod

I couldn’t argue with any of that Dod - I suppose you get used to those dividends coming in and they feel hard to give up maybe? But you’re right, the performance has been poor as we’ve all eluded to. My only issue with SOI is it’s allocation (which richfool kindly posted) and it’s lower exposure to China (compared with some other funds discussed). For me personally, I would prefer to see that percentage higher because whether any of us like it or not, they are a global power. But that figure may prove to be astute if the concerns of the richfools original post transpire, but at that stage we’ll be nursing heavy losses regardless.

I know, I know. I pick managers that I feel I can trust and let them get on with it. Richfool and i have disagreed in the past on this but of course he may well be right, and in any case must do what he feels most comfortable with. I do not like second guessing managers; that is why we employ them. (We do you know, via the management fee, and if we do not like that we should say so at the AGM) Schroders are not stupid and they have a big family holding, a bit like the Cayzers with Caledonia.

Dod

[richfool]

After giving this further thought, I have decided to sit tight and look upon Asia Pacific as a useful diversifier, (to hold) during this period of rising inflation, rising interest rates and recessions in the west.

I have identified which trusts I would sell or reduce, in the event of various scenarios, based on their specific country exposure and in the case of HFEL, its capital depreciation.

[dundas666]

Not sure why IAT (Invesco Asia Trust) was missed from this set, but here's their exposure:

JAGI - China: 35% Taiwan 14.88%
IAT - China: 34.5% Taiwan: 13.1%
HFEL - China: 15.35% Taiwan: 14.62%
SOI - China: 10.5% Taiwan: 23.21%
AAIF - China: 8.2% Taiwan: 20.77%