UK Index Funds

The first investment I made in my life was Hang Seng Index Fund, when I was 17. I, accompanied by my mum, bought the fund at a small branch of Hang Seng Bank in Luen Wo Market. I still remember the excitement when I witnessed my mum signing the documents, although there was really nothing exciting about index funds, which are by definition average, and therefore dull. It would however appear that dull, for the lack of a better word, is good, according to the little blue book The Elements of Investing, or Warren Buffett's letters to shareholders.

I have been collecting funds tracking the Hang Seng Index and MSCI China Index through MPF, Tracker Fund (2800:HK) and iShares MSCI China (2801:HK). Even in these "chaotic times" (to borrow the words of Mr. Lawrence Lok SC), I still believe that China businesses are great in the long run. On the other hand, I will have to diversify part of our investments into other regions to mitigate the home bias and there is nothing better than investing in the second home - there will be second home bias but we can deal with that later.

Among the Hong Kong offices of iShares, SPDR and Vanguard, there is only one index fund tracking UK/Europe stock index: Vanguard FTSE Developed Europe Index ETF (3101:HK). Hongkongers are not particularly interested in index funds and there will unlikely be many choices in Hong Kong in the near future. While there are many ETFs listed on the London Stock Exchange tracking FTSE 100 and other stock indices, it may not be worth the hassle due to taxes, unless of course there is no alternative here in Hong Kong.

Vanguard is apparently selling the same fund (tracking the FTSE Developed Europe Index) in the UK, at the total expenses ratio of 0.15% and it may want to explain why the total expenses ratio quoted in Hong Kong is 0.25%. One possible explanation is that 3101:HK is new (inception on 10 June 2014) but I would not be surprised if its TER remains unchanged for some time due to the lack of real competition in Hong Kong. Be that as it may, considering the tax implications and logistics I would not mind paying a premium of 0.1%.

As at May 2014 32.1% of investments were in the UK, followed by France (14.5%), Germany (13.7%) and Switzerland (13.6%). The price/earnings ratio was 20.0x and the equity yield was 3.1%. Not a bargain, but I will keep an eye on this.

Now time for a bit of nostalgia. Hang Seng is still offering index funds to its customers. Indeed it is selling a fund supposedly tracking the FTSE 100 Index (the performance of the fund is telling a somewhat different story). The subscription fee is 3% whereas the annual management fee is 0.9%. What I cannot now remember is that I had such a deep pocket when I was 17.

Nationality, Abode, Citizenship - BN(O)

While we have only become serious about moving to the UK after The Trip (1, 2 and 3), I had the inclination to have a Plan B - B for Britain - a while ago. During the Chinese New Year, I asked my mum to dig out my good old BN(O) passport, which was issued in 1993 and had expired many years ago. I still have vivid memories of queueing outside the Fanling Government Offices for the application. The BN(O) passport had never been used though. I got my first HKSAR passport in 2000 and have since used that for travelling. I can have no complaint about the HKSAR passport in terms of utility but the national emblem of the Communist China on the cover and the design of the visa pages have been increasingly off-putting.

Before I rediscovered my BN(O) passport I did not quite reckon that I am a British National (Overseas). As a BN(O) I have no right of abode, nor am I a British citizen. In short being a BN(O) I have no right to live in the UK indefinitely. Having said that I was happy to pay Her Majesty's Passport Office a small fee to renew my expired BN(O) passport, and will use that for travelling in the future. As part of the Plan B we should have as many links with the UK as possible. If worse comes to the worst the HKSAR passport is no good, a "mere travel document" like the BN(O) passport would be very useful.

Today I have come across BritishHongKong, which claims to be an organisation registered in Scotland fighting for full British citizenship for all British Nationals (Overseas), see also the coverage by the Hong Kong Economic Journal. It is difficult to see why the people and government of the UK would have any incentive to revisit the BN(O) issues. It may be a cause for celebration if the UK government were to give a few more brownie points to the BN(O) holders when they apply for citizenship.

Birth, Marriage and Death

While in Scotland I asked E the likelihood of "getting" a Scottish death certificate. E said "less then 20%" - not a slim chance by any measure in light of the fact that we have been living in Hong Kong for 33 years since we were born. We had thought that it might be a good idea to buy a second home and spend more time in the UK after our retirement. We returned from London to Hong Kong on 11 June and the very first news story which I picked up on the Airport Express was a "blunt reminder" issued by Beijing on the correct understanding of one country two systems. The long and short of this reminder, dubbed a "white paper", is that the Chinese Communist Party is the boss of Hong Kong. Nothing new perhaps. In the following week Apple Daily was hacked and inaccessible for the best part of the day. While moving to another country will be the last resort, it seems to be high time to prepare for this possibility.

12 years on: return to the Great Britain (Part 3 - London)

Saturday, 7 June

Took a coach from Oxford to London. Heavy traffic on M40. Passed Hillingdon, a Zone 6 tube station in the west. Bought oyster card, left our luggage in the Morton Hotel near the Russell Square tube station and went to Piccadilly Circus. Saw the Piccadilly Lights, property of Land Securities. Lost in Waterstones. Discovered the London branch of the Bank of East Asia, right next to the Chinatown, on the Shaftesbury Avenue - is the naming of Shaftesbury PLC, an investment trust focusing on the West End, somehow related? Pilgrim to the entrance of Ronnie Scott's (which was full). Watched a boring England v Honduras game in Soho and tasted the London Pride (which I suspect is anything but).

Sunday, 8 June

Ran to the Old Vic to buy Clarence Darrow tickets but no luck. Guided by an old boy and wandered around the Portobello Road, Notting Hill. Saw the George Orwell blue plate. Had a beer under sun near the orange coffee van. Glimpsed the ads at Marsh & Parsons and had a feel of the property prices in the Royal Borough of Kensington and Chelsea. Discovered the Victoria and Albert Museum, which we had skipped 12 years ago due to museum fatigue. Shops on Sloane Street closed before 6 on Sunday. Just past the Harrods and enjoyed a really good violin/cello performance near the Knightsbridge tube station. Went to the Canary Wharf, a ghost town on a Sunday evening, and the headquarter of HSBC. Had dinner at Burger and Lobster Knightsbridge.

Monday, 9 June

Headed to the Bank of East Asia London branch for account opening but to no avail, apparently because of my marriage visa. Looked for 84 Charing Cross Road only to discover that it was occupied by Pizza Hut. Walked along the Floral Street and Covent Garden, the largest landlord of which is the dually-listed Capco. Stopped at the London School of Economics. Heard an appeal to the Master of the Rolls' court at the Royal Courts of Justice. Visited the Twinings Strand Shop & Museum, followed by an old Child & Co branch of RBS in 1 Fleet Street, the origins of British newspapers. Had lunch at The Tipperary, dubbed first Irish pub outside Ireland. Walked to the City of London. Had wanted to hear a criminal trial at the Old Bailey but was told by the officer there that as part of the anti-terrorism measures people carrying mobile phones were not allowed enter the courts. Passed the St Paul's Cathedral. Took the tube from the Bank (named after the Bank of England) to Russell Square. Saw a plaque commemorating the attack on the train from Russell Square to King's Cross St. Pancras on 7 July 2005. Asked the staff at HSBC (right under Morton) whether I could open an account and was told that unless one lived, studied or worked in the UK he could not open an HSBC account, with the possible exception of Premier customers. Read books in Waterstones.

E was shopping in Bicester Village (in translation: outlet) in Oxfordshire.

Watched 1984 at Playhouse Theatre near the Embankment tube station.

Tuesday, 10 June

Went to the shop of Charles Dickens Museum, strolled in Bloomsbury, Camden. Took a picture outside the Senate House of the University of London, for the first time and 8 years after graduation (and it seems that the Senate House inspired George Orwell's creation of the Ministry of Truth!) Headed to the City again for the property at 27 Lovat Lane next to the Monument tube station, the first London property we saw. Centrally located in the middle of "Walkie-Talkie" (again a Land Securities / Canary Wharf development) and The Shard, home to Shangri-La. Crossed the London Bridge, bought lunch at Borough Market and ate lunch outside Southwark Cathedral.

12 years on: return to the Great Britain (Part 2 - England)

Wednesday, 4 June

Left Glasgow for Penrith, the county of Cumbria. Rented a Vauxhall Corsa at Enterprise. Went straight to Keswick, had a beer at Dog & Gun and slept in Stonegarth.

Thursday, 5 June

Went south to explore the Lake District, filled our tank at BP, stopped at Windamere. Wandered at White Moss. Had lunch at Potted Out Cafe in Grasmere.  Unforgettable drive to Buttermere.

Friday, 6 June

Pleasant drive to Ullswater. Saw a BMW with a big poppy. Visited the Lowther Castle. Saw the newspapers at Esso and realised that it's the 70th anniversary of the D-Day. Ate ice cream at Abbott Lodge, Clifton, which claims to be "the last battlefield on English soil 1745".

Went south. Read a review on Kevin Spacey as Clarence Darrow on The Telegraph. Changed at Wolverhampton. Went further south to Oxford. Had dinner at Browns. Stayed in Keble College. Read The Telegraph on Oxford itineraries.

Saturday, 7 June

Visited the Boldelian Library and the Radcliffe Square. Climbed the tower of St. Mary's. Had lunch at Quod. Bought a dozen of The Times at student price. Enjoyed a coffee at The Grand Cafe, allegedly the site of the first coffee house in England.

12 years on: return to the Great Britain (Part 1 - Scotland)

Wednesday, 28 May

Returned to Heathrow after 12 years. Bought a pay-as-you-go card at Vodafone. Took BA to Glasgow. Grabbed the FT and read a story on challenger banks. Headed to Ayr, a coastal town in the south west, to meet the assistant registrar. Got loss and saw the Ayr Sheriff Court. Back to Glasgow and visited MacGregor & MacDuff for trying the kilts. Took a copy of GSPC - Glasgow Solicitors Property Centre, no less. Had a curry dinner at Rawalpindi. Slept at Hotel Indigo Glasgow.

Thursday, 29 May

Took the subway and went to Roots Fruits and Flowers. Went to Maybole and visited the Culzean Castle. Bought stuff at Co-op, whose members apparently may share its profits!

Friday, 30 May

Headed to Edinburgh. Visited the Edinburgh Castle, which one o'clock gun reminded us of the noonday gun in Hong Kong operated by Jardine Matheson (Scots!). Dropped by the shop of Scotch Whisky Experience. Just loved the main branch of the Royal Bank of Scotland. Grabbed a copy of ESPC there. Had a dinner at L'Escargot Bleu. Slept at 20 Albany Street.

Saturday, 31 May

Went to RBS and booked an appointment for opening bank accounts. Climbed (sort of) the Calton Hill, with the Nelson Monument there. Shopped at Primark, a subsidiary of Associated British Foods. Bought OST of Four Weddings and a Funeral, Notting Hill and Love Actually, screenplay by Richard Curtis, at HMV. A nice day at Royal Botanic Garden Edinburgh. Dinner at The Magnum.

Sunday, 1 June

Waited E under the Scott Monument, Princes Street Gardens. Returned to Glasgow. Searched for The Umbrella Shop. Shopped at House of Fraser (founded in Glasgow). Had dinner at Two Fat Ladies.

Monday, 2 June

Commuted to Edinburgh for RBS. Went to the Hillhouse in Troon.

Tuesday, 3 June

The Day, in Culzean Castle.