Two ETFs to Play China’s Real Estate Boom

Includes: IFAS, TAO
by: Tom Lydon

China’s real estate market has been flying like a rocket ship. Though there are concerns that it may be moving too fast, there’s an easy way to ride the up-trend with a China real estate ETF.

You can be a part of the property boom in China without actually buying any property. That’s the beauty of ETFs.

Like other real estate-focused funds, Guggenheim China Real Estate (NYSEArca: TAO) allows investment in booming property markets without having to purchase any physical property while giving diversification. Todd Shriber for Chinavestor reports that the ETF is strongly weighted in Hong Kong, at about 73%, while the rest is to mainland China.

Jeb Handwerger for Daily Markets reports that the influx of capital has led to what some say may be a real estate bubble in China. The government recognizes this risk and it appears as though they’re taking steps to cool things off before they get out of control.

There’s no denying it: China’s real estate market is hot. The most direct way to play it is, of course, Guggenheim China Real Estate (NYSEArca: TAO). If China’s moves to cool inflation prove to be too successful, this fund may suffer; likewise if there’s any bubble popping. You can easily protect yourself on the downside by having an exit strategy.

If you want exposure to the Chinese property market, but don’t want too much of it in your portfolio, consider iShares FTSE EPRA/NAREIT Asia (NYSEArca: IFAS). China is 8% of the ETF; Hong Kong, Japan and Australia make up the majority of the ETF.

Tisha Guerrero contributed to this article.

Disclosure: None