The greater China markets and the exchange traded funds that track them are defying the global credit squeeze and hitting new highs almost everyday. But what is the best China ETF to ride this wave?
The largest and most recognizable ETF is the $6.4 billion iShares FTSE Xinhua 25 (NYSEARCA:FXI). Its weakness is that it contains only 25 companies, almost all state owned enterprises, and has 25% of its assets in its top three holdings which is a bit too much for my taste. Another alternative is the PowerShares Dragon Halter USX China (NASDAQ:PGJ) which tracks a somewhat limiting index of China related companies listed on American exchanges.
But I agree with Matthew Hougan writes that the SPDR S&P China (NYSEARCA:GXC) fund will work best for investors over the long haul. Its underlying index includes over 150 companies domiciled in China giving investors broader exposure and hopefully lower volatility.
Dougan writes more broadly about the challenges that State Street Global Advisors is having drawing attention to its fine line up of international ETFs in a crowded marketplace. I always throw up a slide describing them when I speak on building a global ETF portfolio. Let me do my part here to highlight some SSGA international ETFs.
SPDR S&P Emerging Markets ETF (GMM) Index includes more than 1,500 companies across 26 emerging countries.
SPDR S&P Emerging Latin America ETF (NYSEARCA:GML) Index includes companies domiciled in Argentina, Brazil, Chile, Columbia, Mexico, Peru, and Venezuela.
SPDR S&P Emerging Middle East & Africa ETF (NYSEARCA:GAF) Index includes companies domiciled in Egypt, Israel, Jordan, Morocco, Nigeria, and South Africa.
SPDR S&P Emerging Europe ETF (NYSEARCA:GUR) Index features companies in countries that are nearing acceptance into the EU, including Czech Republic, Hungary, Poland, Russia, and Turkey.
SPDR S&P Emerging Asia Pacific ETF (NYSEARCA:GMF) Index includes companies domiciled in China, India, Indonesia, Malaysia, Pakistan, the Philippines, Taiwan, and Thailand.
SPDR S&P China ETF (GXC) Underlying index includes over 150 companies domiciled in China.