The stocks and bonds of the previous two articles are the staple foods of a portfolio. This article covers two side dishes: public REITs (rent collecting) and gold (safe haven). They don’t aim to beat the market; their reason to exist is to make the portfolio’s volatility shape different.
Public REITs: a highway or industrial park, sliced into shares and sold to you
The logic of REITs (real estate investment trusts): a highway, a logistics park, a sewage treatment plant — the toll/rent cash flows of the next few decades are stable. Package that into fund units listed on an exchange, and your ¥1,000 buys you one ten-thousandth of that highway’s toll rights.
Mainland public REITs first listed in 2021, and the underlying assets are infrastructure: highways, industrial parks, warehousing and logistics, government-subsidized rental housing, energy, municipal environmental services, and consumer infrastructure (shopping malls). They are not the office-building-heavy REITs of Europe and America — the property exposure is very low.
The key clause: mandatory dividends. Regulation requires public REITs to distribute more than 90% of distributable income to investors each year. This gives them a bond-like return structure: a cash distribution yield of roughly 4%–8% per year (fluctuating with the secondary-market price), plus appreciation or impairment of the underlying assets.
Trading rules: traded on-exchange, T+1, ±30% price limit on the listing day, ±10% daily thereafter. One lot is 100 units; most varieties cost a few hundred to just over a thousand yuan per lot.
The pitfall you must understand: discount and premium. A REIT’s secondary-market price is set by buy and sell orders and can deviate significantly from the appraised net asset value of the underlying assets. The first batch of REITs was hyped to premiums above 30% at listing; over the following two years valuations mean-reverted, and those who chased the highs lost principal even while collecting every dividend. Before buying a REIT, checking its premium rate to NAV matters just as much as checking the distribution yield.
Who it suits: people who want stable cash flow and can accept principal fluctuating with interest rates and fundamentals. Its role in a portfolio is “quasi fixed-income-plus” — the dividends are stable, but don’t forget the price really can fall (in 2023, some REITs dropped 30% from their issue price).
Gold: no yield, but nobody owes you anything
Gold is the most special of all the instruments: no dividends, no interest, no cash flow — its price rests entirely on consensus. What it hedges is credit itself: currency over-issuance, geopolitical risk, financial-system stress. Gold is one of the few assets that doesn’t depend on any counterparty honoring a promise. Putting 5%–15% gold in a portfolio has historically had a real effect on reducing overall drawdowns.
There are four ways to buy gold in mainland China, with wildly different costs:
1. Gold ETFs (the recommended default). Exchange-traded funds tracking the AU9999 price on the Shanghai Gold Exchange. One lot (100 units) costs a few hundred yuan, trades T+0, carries about 0.5% annual management fee, and buying/selling costs only brokerage commission. Good liquidity, price tracks the gold price tightly — the lowest-cost gold exposure for ordinary investors.
2. Bank gold accumulation plans / paper gold. Bought by the gram in bank apps, starting at 1 gram or 0.01 gram. Note that the bank earns the spread — the gap between its buy and sell quotes, usually a few yuan per gram, equivalent to a hidden fee of around 1%. Suitable for people without a brokerage account who want to accumulate gram by gram; not suitable for frequent trading.
3. Physical gold bars. Buy investment-grade bars from banks or gold shops at a premium of about ¥10–20 per gram, and take a discount of a few yuan per gram on buyback — roughly 3% round-trip friction. Storage is another hidden cost. Gold jewelry is not an investment — the craftsmanship fee and brand premium can exceed ¥100 per gram, and they evaporate to nothing at resale.
4. Gold stocks / gold-stock ETFs. You’re buying mining companies, with more elasticity than the gold price itself (gold up 10% can mean miner profits up 30%), but with company operating risk layered on top, and worse declines on the way down. It’s “leveraged gold” — a stock, not gold.
The shared personality of these two asset classes
- Neither generates yield, or only a fixed one — over the long run they underperform stock indices. Don’t expect them to make you rich.
- Low correlation with stocks — their value shows up at the portfolio level: in years when the stock market crashes, REITs keep paying dividends and gold usually rises, smoothing the portfolio curve considerably.
- Both have a price-versus-value deviation problem: for REITs, watch the discount/premium; for gold, watch the hidden costs of the purchase channel. The way most people lose money on these two instruments is not that the asset itself fails — it’s that they overpaid.
The allocation-level answer
An intuition-based reference frame (not investment advice): in an ordinary mainland portfolio, REITs take 0%–10% (replacing part of the fixed income, boosting cash flow), and gold takes 5%–15% (hedging tail risk). They exist not to make you earn more, but to make you lose less in the worst year — and to keep you holding on.
At this point, one layer of the seven shelves remains uncovered: every instrument passes through the pipe called the account, and the pipe itself has a fee and tax structure — the next article dissects accounts.
Distribution yields, premium rates, and fee levels are reference magnitudes at the time of writing; for specific products, refer to their announcements. This article does not constitute investment advice.