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Morningstar ETF Strategist John Gabriel: Identifying the investment thesis is key to the right ETF

Encompassing a wide variety of investment objectives, running the gamut from global equity to sector offerings, it is undoubtedly a challenge to pick the right ETF. We consulted John Gabriel, Morningstar ETF Strategist, to figure out how investors can go about choosing a suitable ETF for themselves.

Jessie Yung 07.10.2011

ETFs made its debut in Hong Kong a decade ago.  Launched in late 1999, the Tracker Fund of Hong Kong (TraHK) became the first ETF to track the Hang Seng Index.  Unlike the usual ETF, TraHK was the indirect result of Hong Kong authorities’ efforts to ward off speculators led by George Soros in 1998.  To prevent the speculation on the Hong Kong dollar and its equities following the Asian financial crisis, the government acquired HK$120 billion worth of blue-chips over 2 weeks in August 1998 by using its forex reserves.  Post the operation, stocks acquired were subsequently disposed in a systematic manner with the creation of the TraHK, the largest IPO in the Asia ex Japan region at its time of launch.  Despite TraHK’s success, ETF choices remained very limited for retail investors until 2009.  Nearly half of the ETFs listed on the Hong Kong Stock Exchange (HKSE) were launched over the past two years.

 

Till end of August 2011, there are around 80 ETFs listed on HKSE.  Encompassing a wide variety of investment objectives, running the gamut from global equity to sector offerings, it is undoubtedly a challenge to pick the right ETF.  We consulted John Gabriel, Morningstar ETF Strategist, to figure out how investors can go about choosing a suitable ETF for themselves.

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Jessie Yung  

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