How to Choose Among the Many China ETFs

October 28th at 1:00pm by Tom Lydon

Exchange traded fund (ETF) providers are quickly lining up to launch funds that give both broad and targeted exposure to the fast-growing Chinese economy.

Which China ETF you choose, though, depends upon your investment goals and strategy. The performance of many of these funds is tailored to different sectors or asset classes, so depending on which area of the market is in favor, certain funds do better.

Andrew Hart for Green Faucet says that we should be celebrating the differences among funds in order to make the most of an investing opportunity. Not all funds are created alike, and not all investors have the same objectives. [New ETF Gives Access to China's A-Shares.]

Many of the variations of funds may have the same core holdings, but the focus can vary greatly. There are plays on consumer trends, asset classes and even China’s real estate market. [China ETFs: The Shift to Domestic Consumption.]

Some of the funds available now include these below. For a full list of China ETFs, drop by the ETF Analyzer.

  • Market Vectors China (NYSEArca: PEK) Gives exposure to A-Shares. A-shares are issued by companies that have been incorporated in the mainland of China, which trade on the Chinese stock markets. These A-shares have experienced high growth as a result of the slow removal of restrictions placed on the A-shares for foreign investors and a steadily expanding Chinese economy.
  • iShares FTSE/Xinhua China 25 (NYSEArca: FXI): This is the largest China ETF, with nearly $9 billion in assets. Most companies in the ETF are large-caps (96%); top holdings are financials (48%), telecommunications (17.6%) and energy (14.6%).
  • SPDR S&P China (NYSEArca: GXC): Another large China ETF, with $746 million in assets. Financials are still the largest sector, but at 33.8%, has a smaller weighting than FXI. Other top sectors include energy (14.7%), technology (10.7%) and industrials (10.5%).
  • Guggenheim China All-Cap (NYSEArca: YAO): Has $81 million in assets. Financials have a 32% weighting; energy comes in at 17.5% and information technology has 11.2% of the weight. In keeping with its name, this fund gives a lot of exposure to all asset class sizes: large-caps are 46.4%, mid-caps are 32.4%, and small-caps are 19%.
  • Guggenheim China Real Estate (NYSEArca: TAO): Has $56.2 million in assets. This fund is a play on China’s booming property markets, based on a market-cap weighted index.
  • Global X China Consumer (NYSEArca: CHIQ): This ETF launched nearly a year ago and it has $172 million in assets. Retail is the top sector, of course, with 31.8% of the weight. Other sectors include food (21.2%), consumer services (18.3%) and automobiles (14.8%).

Tisha Guerrero 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.