China ETFs Soar, but U.S. Investors Miss Out

It is becoming a common theme. “It” being scores of China exchange traded funds populating the daily all-time and 52-week high lists for ETFs.

On Monday, 15 China ETFs touched all-time highs. Over the past 90 days, 10 of the top 20 non-leveraged ETFs are China funds. However, investors are missing out on a rally that has lifted Hong Kong’s benchmark Hang Seng Index and the Shanghai Composite to multi-year highs.

“As the Hang Seng China Enterprises Index climbed 22 percent this year, traders were caught off guard, pulling about $100 million from the largest China exchange-traded fund in the U.S. over the span,” reports Belinda Cao for Bloomberg.

The ETF being referred to is the iShares China Large-Cap ETF (NYSEArca: FXI). Among the four largest single-country ETFs tracking BRIC nations, FXI trails only the Market Vectors Russia ETF (NYSEArca: RSX) in terms of 2015 returns. However, only the iShares MSCI Brazil Capped ETF (NYSEArca: EWZ), the worst performer of the four big BRIC country-specific ETFs, has lost more assets than the nearly $100 million shed by FXI. [China H-Shares ETFs Surge]

However, data indicate FXI’s outflows are anomaly. For example, investors have allocated almost $34 million to the SPDR S&P China ETF (NYSEArca: GXC) and $637.5 million to the iShares MSCI China ETF (NYSEArca: MCHI).

Inflows to GXC and MCHI could be a sign that investors are realizing those ETFs often outperform over longer periods. MCHI and GXC are up an average of 54.3% over the past three years compared to a 53.7% gain for FXI. [Global ETF Opportunities]