FNI has some drawbacks. For example, the ETF’s index methodology allows it to hold luxury handbag maker Michael Kors (NYSE: KORS) because the company incorporates in Hong Kong. That stock has plunged 16.5% over the past 90 days amid concerns about prolific discounting.
Analysts believe margins at Michael Kors are under pressure after the company forecast fiscal second-quarter EPS of 85-87 cents on sales of $950-$960 million. Analysts are expecting 89 cents on sales of $959.5 million.
Michael Kors is FNI’s sixth-largest holding at a weigh of 5.4%. Due to its heavy exposure to Chinese Internet stocks, FNI is also pricy compared to traditional China ETFs, which are currently deeply discounted compared to the broader emerging markets universe.
FNI sports a P/E of 19.6. By comparison, stocks in Hong Kong trade at 12 times earnings and while China’s A-shares go for about 10 times earnings. [A-Shares ETF Accelerate]
First Trust ISE Chindia Index Fund
