Exploring The Many China Equities Funds, As They Inch Toward New Highs

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May 10, 2017 12:11pm NYSE:FXI


We have been speaking a lot about the continual 52-week highs accompanied by strong inflows into broad-based Emerging Markets funds lately, especially VWO (Vanguard FTSE Emerging Markets, Expense Ratio 0.14%) and IEMG (iShares Core MSCI Emerging Markets, Expense Ratio 0.14%), and to a lesser degree the more expensive EEM (iShares MSCI Emerging Markets 0.72%).

While not quite trading at new 52-week highs, but within shouting distance, are China-equity based ETFs, and China is of course the largest single country weighting within the broad Emerging Markets indices, carrying a 25% weighting in both VWO and EEM and a 23% weighting in IEMG.

In the China equity space itself, iShares has a nice lock-up on the assets invested in the category presently, as FXI (iShares China Large-Cap, Expense Ratio 0.74%, $3 billion in AUM) and MCHI (iShares MSCI China, Expense Ratio 0.64%, $2.2 billion in AUM) are the two largest funds at the moment.

If we include Hong Kong, we see that EWH (iShares MSCI Hong Kong, Expense Ratio 0.48%, $1.6 billion in AUM) is the third largest fund in the segment, with the fourth largest fund finally coming from another ETF issuer in GXC (SPDR S&P China, Expense Ratio 0.59%, $830 million in AUM).

We typically mention both iShares and Vanguard when we speak about the broad-based Emerging Market ETFs like those mentioned at the beginning of this piece, but curiously Vanguard does not have one entrant in the “China Equity” space to compete with iShares or other issuers here. Following GXC there is quite a drop-off in terms of assets when looking at fund sizes, but this is not to say the smaller, more “niche”-oriented funds should be ignored.

Such funds include ASHR (Deutsche Harvest CSI 300 China AShares, Expense Ratio 0.65% $377 million in AUM), KWEB (KraneShares CSI China Internet, Expense Ratio 0.72%, $360 million in AUM), PGJ (PowerShares Golden Dragon China, Expense Ratio 0.70%, $157 million in AUM), PEK (VanEck Vectors ChinaAMC CSI 300, Expense Ratio 0.72%, $87 million in AUM) and HAO (Guggenheim China Small Cap, Expense Ratio 0.75%, $83 million in AUM).

The iShares FTSE/Xinhua China 25 Index ETF (NYSE:FXI) was trading at $38.70 per share on Wednesday morning, up $0.4 (+1.04%). Year-to-date, FXI has gained 11.50%, versus a 7.22% rise in the benchmark S&P 500 index during the same period.

FXI currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #1 of 32 ETFs in the China Equities ETFs category.

Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.

About the Author: Paul Weisbruch

paul-weisbruchPaul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and ETFTrends.com for instance.

He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.

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