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.