China exchange-traded funds (ETFs) offer a way for investors to geographically diversify their portfolios by owning a basket of companies in the world's second-largest economy. Despite the large number of state-owned Chinese enterprises, there are still many companies whose shares are publicly traded and provide investors with opportunities. China ETFs own companies such as Alibaba Group Holdings Ltd. (BABA), Ping An Insurance Group Co. of China Ltd. (601318), and China Yangtze Power Co. Ltd. (600900). While many China ETFs are outperforming the broader market, current risks facing these funds include the effects of the coronavirus pandemic on an already slowing economy, and increasing U.S.-China trade tensions.
The China ETF universe is comprised of about 14 distinct ETFs, excluding inverse, leveraged, and other funds with less than $50 million in assets under management (AUM). The top performing China ETF for Q3 2020, based on performance over the past year, is the KraneShares MSCI All China Health Care Index ETF (KURE). We examine the top 3 best China ETFs below. All numbers in this story are as of May 11, 2020.
- Performance over 1-Year: 34.2%
- Expense Ratio: 0.65%
- Annual Dividend Yield: 0.21%
- 3-Month Average Daily Volume: 69,056
- Assets Under Management: $60.5 million
- Inception Date: February 1, 2018
- Issuing Company: KraneShares
KURE is a large-cap ETF that follows a blended strategy, investing in both value and growth stocks. It tracks the MSCI China All Shares Health Care 10/40 Index, which has about 80 Chinese stocks across a broad range of China's healthcare industry. The ETF is primarily focused on the pharmaceutical industry of China's healthcare sector. The ETF's top three holdings include Jiangsu Hengrui Medicine Co. Ltd. (600276), a pharmaceutical company; Wuxi Biologics Cayman Inc. (2269), a pharmaceutical company; and Shenzhen Mindray Bio-Medical Electronics Co. Ltd. (300760), a manufacturer and distributor of medical equipment.
- Performance over 1-Year: 14.9%
- Expense Ratio: 0.65%
- Annual Dividend Yield: 1.10%
- 3-Month Average Daily Volume: 78,294
- Assets Under Management: $140.5 million
- Inception Date: November 30, 2009
- Issuing Company: Global X
CHIQ is a multi-cap ETF that follows a blended strategy of investing in a mix of growth and value stocks. It tracks an index that contains selected Chinese and foreign companies that have their main business operations in the consumer sector in China. The fund is primarily focused on the consumer discretionary sector. The ETF's top three holdings include JD.com Inc. (JD), an online direct-to-consumer retailer; Alibaba Group, a multinational technology company specializing in e-commerce, internet infrastructure, online financial services, and more; and TAL Education Group (TAL), an educational services company.
- Performance over 1-Year: 14.3%
- Expense Ratio: 0.32%
- Annual Dividend Yield: 0.97%
- 3-Month Average Daily Volume: 29,558
- Assets Under Management: $216.7 million
- Inception Date: September 19, 2012
- Issuing Company: WisdomTree
CXSE is a large-cap ETF that tracks about 150 stocks in the WisdomTree China ex-State-Owned Enterprises Index, which measures the performance of Chinese stocks that are not owned by the government. The fund invests in a mix of value and growth stocks. The ETF's top three holdings include Tencent Holdings Ltd. (700), a provider of internet and mobile value-added services, online advertising, and e-commerce transactions; Alibaba Group; and Meituan Dianping (3690), an online shopping platform for locally based consumer products and retail services.