Select ETFs: China Equities

China has been the fastest-growing major economy in the world for the past three decades. The country’s GDP has grown at an average annual rate of 10.5% over the past 30 years. Investing in China ETFs can provide investors with exposure to Chinese markets without having to directly purchase stocks.

China A-shares offer unmissable opportunities for investors due to their underrepresentation in investor portfolios. Investing in China A-shares could help improve risk-adjusted returns due to their diversification benefits and exposure to China’s increasingly consumer-led economy.

Best for Trading

iShares MSCI China ETF (MCHI)

Expense Ratio: 0.58%

FXI is the most popular ETF option for achieving exposure to the Chinese equity market, and offers unparalleled liquidity. The iShares MSCI China ETF seeks to track the investment results of an index composed of Chinese equities that are available to international investors. For short term traders who value liquidity, MCHI is a great option. But for those seeking China exposure over the long run, there are better ETF options available.

Best for Holding

Franklin FTSE China ETF (FLCH)

Expense Ratio: 0.19%

The Franklin FTSE China ETF (FLCH) tracks an index of large and mid-size companies in China. FLCH provides access to the Chinese stock market, allowing investors to precisely gain exposure to China at a low cost.

The fund is part of a series of single-country ETFs that Franklin Templeton began rolling out in 2017. The funds debuted with significantly lower management fees than rival iShares funds, which have long dominated the single-country ETF space. Many of the stocks in the fund’s portfolio are likely to be found in broadly diversified international equity funds, and investors should be careful not to take on an unintentional overweight. Single-country funds are typically not appropriate for investors seeking a diversified portfolio and are more appealing to short-term traders placing tactical bets on specific markets.

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