Chinese markets have popped over the last year, but due to the varying indexing methodologies, different indices and related exchange traded funds will exhibit differing performances.
Investors buying into Chinese equities markets through ETFs have generated very different returns based on the quantity of A-shares, H-shares or other varities of Chinese shares they hold, reports Kate Beioley for the Financial Times.
Over the long-term, the MSCI China Index, which serves as the underlying index for the iShares MSCI China ETF (NASDAQ: MCHI). has been the best performing of the major benchmarks, beating out peers like the FTSE China A50, Hang Seng China Enterprises and MSCI China A indices.
MCHI’s underlying MSCI China Index covers 85% of the Chinese stocks listed on foreign exchanges, which excludes Chinese A-shares or shares traded on mainland exchanges, and is comprised of 152 large- and mid-cap company stocks, including major internet names like Tencent and Alibaba.
Over the past decade, the MSCI China Index has generated a total return of 135.8%, with the technology segment, which makes up more than 40% of the index, accounting for a major portion of the total return. Over the past year, MCHI increased 47.1%.
MCHI includes a 41.7% tilt toward technology names, including Tencent 19.1% and Alibaba 12.4%, followed by a 23.5% position in financials and 9.2% consumer discretionary.