There are investment products to bet on Asia without heavy Chinese equity exposure. Enter the iShares Asia 50 ETF (AIA), which gives ETF investors exposure to four top Asian economies outside China.

AIA seeks to track the S&P Asia 50, which is a float-adjusted, market capitalization-weighted index that is designed to measure the performance of the 51 leading companies listed in four Asian countries or regions: Hong Kong, Singapore, South Korea, and Taiwan. The fund generally will invest at least 90% of its assets in the component securities of the index and in investments that have economic characteristics that are substantially identical to the component securities, and may invest up to 10% of its assets in certain futures, options and swap contracts, cash, and cash equivalents.

Overall, AIA provides investors exposure to:

  1. Larger and well-established Asian companies
  2. Access to 50 of the largest Asian stocks in a single fund
  3. Use to diversify internationally and express a regional view

AIA is beating the MSCI China Index by 4% with a 50% gain over the past year. Its expense ratio of 0.50% is right around its category average.

AIA Chart

AIA Loving the Tech Exposure

What’s driving the strong performance of AIA? Its a heavy reliance on the tech sector.

The fund’s top three holdings, which comprise almost 45% of the fund as of January 22, include household names in Asian tech industry. These names include tech conglomerate Tencent Holdings, chip maker Taiwan Semiconductor Manufacturing, and Samsung Electronics.

Tencent is up almost 100% within the past year. That performance was actually eclipsed by its second largest holding, Taiwan Semiconductor, which is up over 120%.

TCTZF Chart

AIA is up 32% over the past three months. Momentum is clearly on the side of the ETF, as evidenced by the relative strength index (RSI) indicator, which is showing overbought levels at 77.16.

However, when confirming the momentum, the stochastic relative strength index (StochRSI) is showing 0.397, which could signal that the ETF has more room to run. The fund returned to its pre-pandemic levels back in July 2020, and has been staying above its 50-day moving average since late September of last year.

AIA Chart

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