Best China ETFs for Spring 2022
Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.
The investing information provided on this page is for educational purposes only. NerdWallet does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments.
Investors looking to diversify their portfolios geographically have a range of options, and getting into China — the world's second-largest economy — can be particularly appealing. If so, one route is to buy China exchange-traded funds.
Jump to see the best-performing China ETFs
What are China ETFs?
China ETFs are exchange-traded funds that track publicly listed Chinese companies and give investors exposure to Chinese markets without having to directly purchase those stocks. Instead, the issuing company purchases the underlying asset (such as stocks, bonds or currency), and fund investors purchase shares in the fund. As the underlying assets rise and fall, so does the value of your fund investment.
Researchers say investors often suffer from “home bias” — the tendency to purchase domestic stocks for their portfolio. But U.S. stocks make up only about 56% of global equities. Exposure to international markets, especially a large player like China, gives investors the benefit of diversification as one region’s markets may rise while others fall.
Investing in China ETFs carries risks, such as trade tensions with the U.S. and the aftermath of the coronavirus outbreak. Still, many investors are placing long-term bets on the world’s second-largest economy.
» MORE: How does an ETF work?
How to invest in China ETFs
Here’s how to buy shares in a China ETF:
Step 1: Find a China ETF
Search for China ETFs on your broker's website. (No broker? Here's how to open a brokerage account.)
 |  |  |
|---|---|---|
Fees$0 per trade | Fees$0 per trade for online U.S. stocks and ETFs | Fees$0 per trade |
Account minimum$0 | Account minimum$0 | Account minimum$0 |
PromotionUp to $600 when you invest in a new Merrill Edge® Self-Directed account. | PromotionGet $100 when you open a new, eligible Fidelity account with $50 or more. Use code FIDELITY100. Limited time offer. Terms apply. | PromotionGet 6 free stocks when you open and fund an account with Webull. Promotion ends 6/9/2022. |
Step 2: Analyze the ETF
Some things to check before purchasing shares in a China ETF:
Type of China ETF. There are many China ETFs available to U.S. investors, including equity, fixed income and currency assets classes. Some focus on the total China market, while others focus on company size or a particular sector, such as technology, health care and real estate.
Expense ratio. This annual fee is paid out of your investments in the fund, so the lower the expense ratio, the better. The average expense ratio for China ETFs is 0.7%, according to ETF.com.
Important note: The average investor should avoid leveraged China ETFs, which use financial derivatives and borrowed cash to make predictions on future prices. The average investor also shouldn't consider China exchange-traded notes, or ETNs, which are secured debt obligations. Unlike ETFs, these funds don’t actually own the underlying asset and have a higher risk of default. These investments aren’t good for a buy-and-hold strategy favored by many investors saving for the long term.
Step 3: Buy the China ETF
You can purchase ETFs just like you’d buy a company stock — for both, you need an online brokerage account to buy and sell shares.
To see brokerages with a broad ETF selection, check out our full list of the best brokers for ETF investing.
Best-performing China ETFs
Below is our list of best-performing China equity ETFs. We've excluded China exchange-traded notes and leveraged China ETFs.
Name | Symbol | 5-year return |
|---|---|---|
Global X MSCI China Consumer Discretionary ETF | CHIQ | 61.11% |
iShares MSCI China A ETF | CNYA | 56.36% |
Global X MSCI China Energy ETF | CHIE | 54.29% |
Pacer CSOP FTSE China A50 ETF | AFTY | 54.25% |
WisdomTree China ex-State-Owned Enterprises Fund | CXSE | 53.25% |
Global X MSCI China Materials ETF | CHIM | 50.19% |
KraneShares Bosera MSCI China A 50 Connect Index ETF | KBA | 47.19% |
Xtrackers Harvest CSI 300 China A-Shares ETF | ASHR | 42.41% |
First Trust China AlphaDEX Fund | FCA | 40.25% |
KraneShares CICC China Leaders 100 Index ETF | KFYP | 39.08% |
Data is current as of March 10, 2022. Data is solely for informational purposes and not for trading purposes or advice.
Learn more about sector ETFs:
Disclosure: The author held no positions in the aforementioned investments at the original time of publication.
