Chinese Permanent Portfolio

[glennds]

Pardon me if this has already been discussed, but is there a way for a US investor to assemble the functional equivalent of a Chinese Permanent Portfolio?

This is to say the three buckets other than gold would need to be Chinese i.e. Chinese stocks, China Long Term Government Bonds, Cash in the form of RMB. Gold is gold, so there is no reason not to invest in it in the preferred way whether it be physical, US Gold ETF or whatever.

It just seems to me that the two economic superpowers vying for dominance are the US and China. If an investor were a believer in the Permanent Portfolio, why not diversify by having one based on each country/government/economy? I have been to China and my observation is what is going on there economically is phenomenal, and in terms of government debt, just go compare their government debt to GDP ratio to the US and you'll see the attraction.

I have found ways to invest in China's stock market through ETFs that hold stocks of companies domiciled in China. And I have located at least one ETF that holds RMB for the cash component.

I am not clear on if and how it would be possible for a non-institutional investor to hold China long maturity government debt or direct cash.

Any feedback from anyone who has done this would be useful, and any thoughts appreciated.

[Smith1776]

I have an explicit allocation to emerging markets, but this idea hasn't really occurred to me.

I don't hold any special insight here, but I am subbed.

[dualstow]

I have traveller’s cheques that were denominated in RMB. It’s not a good idea for travel. I got shafted on the fees when I redeemed some at the bank of China. It may not be a good idea for a Chinese pp cash slice either, but maybe it’ll spark ideas in someone somewhere.

It just seems to me that the two economic superpowers vying for dominance are the US and China. If an investor were a believer in the Permanent Portfolio, why not diversify by having one based on each country/government/economy?

I commonly see two or three responses to this:
• I don’t think Harry Browne was big on international stocks. He was clear on holding your own country’s assets, particularly the currency in which you’re making your living. Some people do hold the global market as their stock portion.
• Related: so many US stocks are already part of the global economy. When you buy Pepsi, you are connected to China.
• Gold is an “internationalizing” element.

I’ve held a few Chinese stocks here and there in the VP, but I am turned off by the way things operate (the tiny inkling that I have of it). State run and state-propped-up enterprises and entities competing as if they’re a normal part of the free market, formerly free companies being taken over by the government, and so on. I guess I could buy a broad Chinese index (I hold an Israel iShares ETF in my VP), and I suppose I’m relieved that it was not a part of Browne’s strategy.

I’m curious to see if we’re going to continue to delist many Chinese corporations in the U.S.
https://www.forbes.com/sites/robertolse ... f21fce635c

A superficial take on it, perhaps, but it works for me.

[Smith1776]

Some of my relatives in China could really use a PP allocation there.

Since no one has chimed in I think I'll make this into a research project for myself.

[dualstow]

Some of my relatives in China could really use a PP allocation there.

Since no one has chimed in I think I'll make this into a research project for myself.

Well that’s different if they’re living in China, right?

[Smith1776]

Some of my relatives in China could really use a PP allocation there.

Since no one has chimed in I think I'll make this into a research project for myself.

Well that’s different if they’re living in China, right?

For sure!

[glennds]

Some of my relatives in China could really use a PP allocation there.

Since no one has chimed in I think I'll make this into a research project for myself.

I'm doing the same. Let's compare notes at some point.

[cguy3]

Interesting idea. This is the best I could come up with:

25% MCHI (iShares MSCI China ETF)
25% IAU (iShares Gold Trust)
25% CYB (WisdomTree Chinese Yuan Fund)
25% CNYB (iShares China CNY Bond UCITS ETF)

Issues with this porfolio:
- MCHI tracks the MSCI China index, which includes the largest and most liquid Chinese stocks listed on the Hong Kong stock exchange (H-Shares, B-Shares, Red Chips, P Chips). It does NOT include A-Shares that trade on the Shanghai and Shenzhen stock exchanges, but you can get this exposure by adding ASHR (Xtrackers Harvest CSI 300 China A-Shares ETF).
- CNYB is the closest I could find to a long term treasury equivalent. It only has a duration of 5.6 years, so it is more like an intermediate-term treasury fund. Curious if anyone has found a better alternative.