Asia ETFs: Developed or Emerging, You Have Options

June 24th at 3:00pm by Tom Lydon

Exchange traded funds (ETFs) have made it easier for the regular investor to gain access to China and other Asian emerging markets. Still, emerging economies aren’t for the conservatives at heart since they come with greater risk and higher volatility.

The iShares FTSE/Xinhua China 25 (NYSEArca: FXI) is one of the largest Asia ETFs, with almost $8 billion in assets, and the fund is also one one of the more liquid U.S.-listed ETFs, trading at an average daily volume of around 37.4 million shares in the last month, writes John Spence for MarketWatch. FXI tries to reflect an index of the 25 largest and most liquid Chinese companies that are traded on the Hong Kong Stock Exchange. The ETF has an expense ratio of 0.73%. [China ETFs, Rising Wages and the Trade Deficit.]

China is a popular investment locale, with its growing middle glass and robust export base. The Chinese economy my also be recovering faster than the rest of the world after that last financial hiccup. However, it should be noted that about 45% of FXI’s portfolio is in the financial sector – observers are concerned with a possible bubble that is emerging in China’s housing and stock markets. [Asian ETFs: On Track for Dominance? Some Say So.]

The size of Asia’s economy is forecast to surpass that of many developed nations – including our own – not long from now. If you’re not comfortable with China, the ETF industry has given investors countless ways to access this exciting and fast-growing region of the world.

A few other China ETF options include:

  • PowerShares USX Golden Dragon Halter (NYSEArca: PGJ)
  • SPDR S&P China (NYSEArca: GXC)
  • Claymore/AlphaShares China Small Cap (NYSEArca: HAO)
  • Claymore/AlphaShares China All-Cap (NYSEArca: YAO)
  • ProShares UltraShort FTSE/Xinhua China 25 (NYSEArca: FXP). For those with a pessimistic outlook, FXP moves 200% in the opposite direction.

Developed Asia economy options include:

  • iShares MSCI Japan (NYSEArca: EWJ)
  • Vanguard Pacific Stock ETF (NYSEArca: VPL). A comparable developed markets fund that includes Japan.

Some other Asia emerging market ETFs include:

  • iShares MSCI Pacific ex-Japan (NYSEArca: EPP). EPP primarily provides exposure to Australia, Hong Kong, Singapore and New Zealand.
  • iShares MSCI All Country Asia ex Jpn Idx (NasdaqGM: AAXJ). Provides basic Asian emerging market exposure.
  • SPDR S&P Emerging Asia Pacific (NYSEArca: GMF). GMF provides exposure to China, Taiwan, India, Malaysia, Indonesia, Thailand and the Philippines.
  • iShares MSCI Malaysia Index (NYSEArca: EWM)
  • iShares MSCI Singapore Index (NYSEArca: EWS)
  • iShares MSCI South Korea Index (NYSEArca: EWY)
  • iShares MSCI Taiwan Index (NYSEArca: EWT)

Investors may also choose to invest in a wide array of Asia currency ETFs, including CurrencyShares Japanese Yen Trust (NYSEArca: FXY) and WisdomTree Dreyfus Chinese Yuan (NYSEArca: CYB).

For more information on Asia, visit our Asia category.

Read the disclosure; Tom Lydon is a board member of Rydex|SGI.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.