There are nearly 40 exchange traded funds on the market today dedicated to either Chinese equities or bonds and the number is growing.
And as is the case with scores of U.S.-focused ETFs that have similar names, advisors and investors need to remember that no two China ETFs are exactly the same. On the upcoming webcast, The Expanding Chinese Equity Opportunity, which will take place at 2PM Eastern time on Thursday Nov. 20, Matthew Bartolini and Jared Rowley of State Street Global Advisors will highlight how investors can gain broader exposure to Chinese equities with the SPDR S&P China ETF (NYSEArca: GXC).
Now seven and a half years old, GXC is one of the largest U.S.-listed China ETFs with over $980 million in assets under management. On Thursday’s webcast, Bartolini and Rowley will highlight, among other factors, how GXC’s deeper roster of stocks and lower fees can help boost client returns.
With an annual fee of 0.59%, GXC holds nearly 600 stocks compared to a 0.74% expense ratio and just 52 stocks held by the the iShares China Large-Cap ETF (NYSEArca: FXI). As Bartolini and Rowley will discuss, those differences can lead to significant performance gaps between those two ETFs – gaps that favor GXC. [Proper Use of China ETFs]
Over the three-year period ending ending Nov. 17, GXC rose 29%, more the double the returns offered by FXI over the same time frame. GXC was also 160 basis points less volatile than its rival over that period.
Chart Courtesy: ETF Replay
Bartolini and Rowley will also discuss GXC’s exposure to N-Shares: Chinese companies, including many of China’s newest and most prominent technology firms, with a primary listing on one of the New York stock exchanges.
That includes GXC’s 6.2% weight to Baidu (NasdaqGS: BIDU). China’s largest Internet search provider is not a member of FXI’s lineup.
However, GXC’s underlying index, the S&P China BMI Index, allows for the inclusion of Chinese companies that only have U.S. listings while some rival ETFs and index providers stipulate that companies must be listed in China to be included in China ETFs.
Yes, that means GXC could eventually be home to Alibaba (NYSE: BABA). Prior to the company’s September initial public offering, S&P Dow Jones Indices said, “According to our published index rules, Alibaba Group Holding would be eligible for all standard S&P Dow Jones Global Benchmarks that include Chinese stocks. In particular, it will be screened for inclusion in the S&P China BMI, and therefore the S&P Emerging BMI and S&P Global BMI, according to the index’s standard IPO addition policy.” [S&P Indices to Include Alibaba]
Financial advisors who are interested in learning more about GXC and its approach to Chinese stocks can register for the Thursday Nov. 20 webcast here.
Todd Shriber owns shares of Alibaba.