China’s real estate market has been flying like a rocket ship. Though there are concerns that it may be moving too fast, there’s an easy way to ride the uptrend with a China real estate exchange traded fund (ETF).
You can be a part of the property boom in China without actually buying any property. That’s the beauty of ETFs.
Like other real estate-focused funds, Guggenheim China Real Estate (NYSEArca: TAO) allows investment in booming property markets without having to purchase any physical property while giving diversification. Todd Shriber for Chinavestor reports that the ETF is strongly weighted in Hong Kong, at about 73%, while the rest is to mainland China. [China ETFs: Plays For The World’s Number 2 Economy.]
Jeb Handwerger for Daily Markets reports that the influx of capital has led to what some say may be a real estate bubble in China. The government recognizes this risk and it appears as though they’re taking steps to cool things off before they get out of control. [How to Choose Among the Many China ETFs.]
There’s no denying it: China’s real estate market is hot. The most direct way to play it is, of course, Guggenheim China Real Estate (NYSEArca: TAO). If China’s moves to cool inflation prove to be too successful, this fund may suffer; likewise if there’s any bubble popping. You can easily protect yourself on the downside by having an exit strategy.
If you want exposure to the Chinese property market, but don’t want too much of it in your portfolio, consider iShares FTSE EPRA/NAREIT Asia (NYSEArca: IFAS). China is 8% of the ETF; Hong Kong, Japan and Australia make up the majority of the ETF.
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.