Seven years ago, I was building my career in San Francisco as a portfolio manager when a colleague approached me and asked if I would have any interest in building the exchange traded fund (ETF) business in Hong Kong. For those of you who have considered relocating for a job, I’m sure you can empathize with the millions of thoughts that ran through my head in a split second, including “This is so exciting! The things I could do with this opportunity! What about my friends? What will the new team be like? What are the rents like in Hong Kong? Is it easy to wire money and open bank accounts?” Now that I’m back stateside, it’s never been clearer to me: With all of the opportunities life throws at us, sometimes we have to take a leap of faith and step outside of our comfort zone, but yet at the same time take calculated and smart risks. The same goes for investing, particularly when taking what we call a precision exposure approach – using investment tools to express a market view or specific outcome. Here are some things to keep in mind:
- Considering the resource factor. When I made the move from the United States to Hong Kong, I had the backing and full support of my company. They provided resources and the tools needed for me to be successful in a role driving the business abroad. As investors, it can be difficult to know what resources are available to construct but, more importantly, tailor, our portfolios to achieve our goals. And there is no one-size-fits all. We all know that it’s important to think – and invest – globally. We all know that emerging markets provide growth potential. We all know that keeping all of our eggs in the proverbial basket (i.e. sticking to domestic stocks) isn’t a smart move and that diversification is critical. But sometimes getting started can be daunting without the help of a financial advisor or the right tools and resources.
- Knowing how to go global. One of the biggest lessons I learned during my overseas adventure abroad was just how vast the world is, and that much exists outside the U.S. Though that may sound cliché, there is a key investment thesis here: No one lives in “Asia Pacific” and I could no longer think of the world in such terms. Same goes for “emerging markets” and “Europe”. I lived in Hong Kong, my teams were in Japan, Australia, and Singapore. We had clients in China, Thailand, and Malaysia. This experience reinforced to me that Asia is a vast, diverse and quickly growing part of the world, comprised of many distinct countries with different economies, cultures, and regulations. The world is getting much more precise and we have to start thinking that way. As an investor, it can be difficult to know where to begin – do you buy stock in a Chinese company? Or do you pick one exchange traded fund (ETF)? What about currency risk? These are questions that can be difficult to answer on your own
- Knowing how to use sharp tools. I love to cook and have often thought of life as a professional chef. While in Asia, I studied a variety of local cooking techniques, which include having the right tools and taking time to prepare your ingredients. You can be sure I will never be without a sharp knife and the knowledge of how to use it. For investors, this knowledge can be extremely powerful and investing overseas can be a lot easier when armed with precision knowledge. For a bit more on this, consider currency risk basics.
If you’re an investor who is looking to step out of your comfort zone and navigate an increasingly complex universe and define your portfolio on your own terms, you’ll be glad to know you don’t have to go it alone. Stay tuned for my next Blog post and, in the meantime, if you have any questions about how to you should be thinking of currency risk feel free to ask them here.
Jane Leung, Managing Director, is Head of iShares Precision Exposures, where she and her team develop innovative ways to help investors reach their goals.