7 Best China ETFs for May 2024
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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.
» Interested in ETFs? Check out the best ETFs by one-year performance.
Best-performing China ETFs
Below is our list of best-performing China equity ETFs.
Ticker | ETF Name | 5 Year |
|---|---|---|
KBA | KraneShares Bosera MSCI China A 50 Connect Index ETF | 5.36% |
KGRN | KraneShares MSCI China Clean Technology Index ETF | 2.45% |
CHIQ | Global X MSCI China Consumer Discretionary ETF | 1.68% |
CNYA | iShares MSCI China A ETF | -0.05% |
ASHS | Xtrackers Harvest CSI 500 China A-Shares Small Cap ETF | -0.39% |
CNXT | VanEck ChiNext ETF | -1.08% |
ASHR | Xtrackers Harvest CSI 300 China A-Shares ETF | -1.87% |
Source: VettaFi. Data is current as of May 1, 2024, and is for informational purposes only.
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 investors purchase shares in the fund. As the underlying assets rise and fall, so does the value of your fund investment.
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Researchers say investors often suffer from “home bias” — the tendency to purchase domestic stocks for their portfolio. And while U.S. stocks do make up about 63% of global equities, exposure to international markets (especially a large player such as China) gives investors the benefit of diversification.
Investing in China ETFs carries risks, such as trade tensions with the U.S. and other geopolitical factors. Still, many investors are placing long-term bets on the world’s second-largest economy.
» Learn more: What are ETFs?
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.)
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 0.77%.
Important note: Leveraged China ETFs use financial derivatives and borrowed cash to make predictions on future prices. These types of ETFs are riskier than traditional ETFs and should be approached with caution. This is also true of 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 are less appropriate for a buy-and-hold strategy favored by many investors saving for the long term.
» MORE: Investing in ETFs vs. mutual funds
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.
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