“However, investors considering adding exposure to the
largest emerging market should be sure to look inside of the holdings,” Rosenbluth warned.
For instance, ASHR, the largest China A-shares-related ETF, tracks a group of large-cap Chinese companies, with a large 39.8% tilt toward financials, along with industrials 17.4%, consumer discretionary 11.0% and information technology 7.4%.
On the other hand, other popular plays, like the Market Vectors ChinaAMC SME-ChiNext ETF (NYSEArca: CNXT) and Deutsche X-trackers Harvest CSI 500 China A-Shares Small Cap Fund (NYSEArca: ASHS), lean toward more Chinese middle-capitalization companies that trade on the mainland.
Due to its smaller company tilt, ASHS only has a 9.1% exposure to financials but holds a greater position in industrials 23.3%, consumer discretionary 15.8% and technology 14.3%.
Additionally, CNXT has an even smaller 6.9% tilt toward financials, but a much higher weight in technology at 32.8%.
“We think the distinct exposures are notable as CNXT was up 40% year-to-date through December 9, ahead of 25% gain for ASHS and a 4.6% decline for ASHR,” Rosenbluth added.
For more information on China, visit our China category.
Max Chen contributed to this article.