China + Healthcare = A Winning Formula for 'CHIH' | ETF Trends

Chinese equities continue to gain strength into 2021 as the second largest economy continues to recover from the pandemic. Healthcare was one of the shining sectors last year and the Global X MSCI China Health Care ETF (CHIH) is already up 17% year-to-date.

CHIH seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI China Health Care 10/50 Index. The fund invests at least 80% of its total assets in the securities of the underlying index and in ADRs and GDRs based on the securities in the underlying index.

The underlying index tracks the performance of companies in the MSCI China Index (the “parent index”) that are classified in the health care sector, as defined by the index provider. Overall, the fund gives ETF investors:

  • Targeted Exposure: CHIH is a targeted play on the Health Care Sector in China – the world’s second largest economy by GDP.
  • ETF Efficiency: In a single trade, CHIH delivers access to dozens of health care companies within the MSCI China Index, providing investors an efficient vehicle to express a sector view on China.
  • All Share Exposure: The Index incorporates all eligible securities as per MSCI’s Global Investable Market Index Methodology, including China A, B and H shares, Red chips, P chips, and foreign listings, among others.

CHIH is up almost 70% within the past year. The relative strength index (RSI) indicator is showing 70.76, confirming overbought levels and strong momentum.


Outperforming the Broader MSCI Index

Going head to head with the broader MSCI China index, CHIH is up almost 30% higher. Its performance is in rough lockstep with the S&P China A 300 Health Care Index, which has gained about 65% the past year.


CHIH’s top holding at about 10% is WuXi Biologics (Cayman) Inc. It’s easy to see why, given that it has risen over 200% the past year.

Look for the field of biologics and biopharmaceuticals to continue growing, especially after the pandemic puts the importance of these fields in the spotlight. As an industry report press release noted, “the biopharmaceuticals contract manufacturing market was valued at US$ 13,727.13 million in 2019 and is expected to grow at a CAGR of 8.2% from 2020 to 2027 to reach US$ 25,497.26 million by 2027.”


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