U.S. stocks posted solid first-quarter showings as highlighted by a gain of nearly 6%, but with April and the start of the second quarter here, investors may want to consider some international investments. There are some ex-US exchange traded funds that have a penchant for performing well in April.
That group includes the iShares China Large-Cap ETF (NYSEArca: FXI), the largest China exchange traded fund listed in the U.S. FXI is up almost 11% year-to-date, trailing the 12.5% returned by the widely followed MSCI Emerging Markets Index. China is the largest geographic weight in the MSCI Emerging Markets Index.
Ongoing reforms, notably from the supply side, could further support Chinese economic growth. Reforms have bolstered industrial profitability and strengthened commodity prices. China’s exporters are also enjoying improvements from a rebound in global trade.
The Chinese economy is also shifting towards domestic-oriented consumption as a main growth driver. Consequently, consumption-driven sectors such as technology and services are becoming a growing component in the economy.
“Interestingly, data from the Investment Company Institute last week also showed a rotation out of U.S. markets and into funds that buy international stocks. Historical data suggests these traders may be on to something, too, with several international exchange-traded funds (ETFs) historically outperforming in April,” according to Schaeffer’s Investment Research.
Home to nearly $3.1 billion in assets under management, FXI is almost 13 years old. In its years on the market, the big China ETF has averaged an April gain of 4.6%, according to Schaeffer’s data.
Last month, the People’s Bank of China (PBoC) raised interest rates, a move that was mostly cheered by international financial markets.
BlackRock analysts believe China could experience solid near-term growth as global companies have become increasingly positive in China, based on analysis of text mining of corporate conference calls.
“FXI could be in focus in the coming days, with Chinese President Xi Jinping scheduled to meet with Donald Trump later this week. There’s also some interesting options data among the bunch,” notes Schaeffer’s.
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