I don't really like selling ASX shares. For the entirety of my investing career, I have been a net buyer of shares (and sometimes a net holder), but never a net seller. The great investor Warren Buffett once told us that his favourite holding period for a share is 'forever'. This is a sentiment I share.
But last week, I did sell one of my investments. It wasn't an easy decision, and the inevitable has happened in that those shares have now appreciated far beyond my selling price. But I sold all the same and I'm glad I did.
The share I sold was the iShares Asia 50 ETF (ASX: IAA).
What is the iShares Asia 50 ETF?
The iShares Asia 50 is an exchange-traded fund (ETF) that holds 50 of the largest companies across the Asian region, according to the S&P Asia 50 Index. Its largest exposure is to China, but it also holds companies from South Korea, Taiwan, Hong Kong and Singapore. Its largest individual companies include Tencent Holdings, Samsung, and Taiwan Semiconductor Manufacturing Company.
Why did I sell this ASX ETF?
I sold my position in the IAA ETF for 2 reasons.
Firstly, I think it's prudent right now to increase the cash position in my portfolio. The ASX, as well as global share markets, have had an incredible run since the lows we saw in March. IAA's largest holding, Tencent, has run up more than 20% in the last month alone, which was an orange flag for me. This ETF was therefore one holding I was happy to take some profits on and use to bump up the cash position of my portfolio as part of a risk management strategy.
Secondly, there's an ETF that I prefer over IAA. I think exposure to emerging markets like China and Taiwan is important in a 21st-century portfolio. But IAA doesn't include some of Asia's biggest names in tech, like Alibaba, Baidu, iQiYi and JD.com.
However, the BetaShares Asia Technology Tigers ETF (ASX: ASIA) does, as it uses a slightly different index as its benchmark. For this reason, I think ASIA is better placed than IAA to capture the value that emerging markets can bring to the table over the next few years .
As such, it's my intention to eventually redeploy my capital from the IAA sale into the ASIA ETF. But I'm in no rush at the current prices and am happy to sit on my gains from this sale until the markets take a chill pill and come back from their current levels.
