Not all new exchange traded funds garner the benefit of good timing. The Deutsche X-trackers Harvest MSCI All China Equity Fund (NYSEArca: CN) is a prime example of a new ETF with a well-timed launch.
CN debuted at the end of April, following months of disappointment and lethargy by China ETFs. Those glum traits have given way to renewed investor interest in and significant upside by China ETFs. In proof of its good timing, CN has surged 14.7% since coming to market, beating the Vanguard FTSE Emerging Markets ETF (NYSEArca: VWO) and the iShares MSCI Emerging Markets ETF (NYSEArca: EEM) by wide margins over the period.
CN offers exposure to China A-shares in addition to China B-shares, China H-shares, China Red Chips, China P-Chips, China ADRs, and securities of Chinese companies listed in the US and Singapore. The ETF holds nearly 150 stocks or more than five times as many as the largest U.S.-listed China ETF. [New ETF Offers Broad Approach to China]
While not a true ETF of ETFs, CN’s two largest holdings are the popular Deutsche X-trackers Harvest CSI 300 China A-Shares Fund (NYSEArca: ASHR) and the Deutsche X-trackers Harvest CSI 500 China A-Shares Small Cap Fund (NYSEArca: ASHS). ASHS became the first U.S.-listed small-cap ETF devoted to China A-shares equities with its May debut. [Access Small-Cap A-Shares With This ETF]
CN allocates over 49% of its combined weight to ASHR and ASHS, which helps drive the new ETF’s valuation appeal.
The CSI 300 Index, which tracks stocks listed on the Shanghai and Shenzhen exchanges, trades at a price-to-earnings ratio of less than 10, the lowest in over a decade, while Chinese shares listed on the Hong Kong exchanges trade at over 12 times earnings. A-shares are trading at their largest discount to H-shares in five-years. [A-shares ETFs Earn A’s]