The Invesco Golden Dragon China ETF (PGJ) is a strong ETF to consider as China stocks rebound.
China stocks began their rally amid authorities’ abrupt pivot away from the country’s zero-COVID policies, spurring a rebound in investor sentiment toward the asset class.
PGJ has increased 16.9% on a total return basis year to date as of January 1. Between October 11 and January 11, PGJ gained 41.2%, according to YCharts.
“Advisors have started 2023 embracing the reward potential of emerging market equities and PGJ has been one of the winners,” Todd Rosenbluth, head of research at VettaFi, said. “The fund’s focus on companies with significant revenues stemming from China has helped.”
PGJ was among the best-performing non-leveraged ETFs in November. The fund is based on the NASDAQ Golden Dragon China Index, which is composed of U.S. exchange-listed companies that are headquartered or incorporated in the People’s Republic of China.
As many U.S. investors have a home-country bias, PGJ could serve as a possible diversification play in an equity portfolio.
The top industries represented in PGJ include internet direct marketing retail, interactive media services, automobiles, hotels, restaurants, leisure, entertainment, and semiconductors and semiconductor equipment. The ETF leans toward the technology, internet, and e-commerce segments.
The fund holds 64 securities as of January 11, according to VettaFi. Top holdings currently include Alibaba Group Holding Ltd (BABA), Baidu Inc (BIDU), Pinduoduo Inc (PDD), JD.com, Inc (JD), NIO Inc (NIO), Netease Inc (NTES), Vipshop Holdings Ltd (VIPS), H World Group Limited (HTHT), Trip.com Group Ltd (TCOM), and ZTO Express (Cayman) Inc (ZTO).
Incepted in 2004, PGJ has a long track record and $253 million in assets under management, with the fund accreting $74 million in inflows over one year, according to ETF Database.
PGJ charges a 70 basis point expense ratio.
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