FXI, though, is heavily tilted toward the financial sector, which makes up over 50% of the portfolio. However, the ETF could benefit as the government moves ahead with increased financial reforms.
Additionally, the Deutsche X-trackers Harvest CSI 300 China A-Shares Fund (NYSEArca: ASHR) provides investors access to domestic Chinese A-shares. Through the RFQII program, ASHR gains foreign access to local Chinese markets. The ETF includes a slightly lower tilt toward financials at 34% of the portfolio, so investors may find more sector diversity. The relatively new fund has been a popular addition to the ETF universe, growing its assets under management by over 200% in just a few months. [Strong Demand Forces Deutsche to Limit Creations in A-Shares ETFs]
As China’s government shifts over to a consumer driven economy, such as the U.S. where consumer spending make up almost 70% of the economy, Chinese equities could begin to outperform many global economies.
For more information on China, visit our China category.
Max Chen contributed to this article.