10 Best Performing China ETFs

The so-called Chinese bounce back hit the headlines yesterday 9 July, but Chinese stocks are still down 32 percent in the last week and 25 percent in the last eight days alone.

Jasper Lawler, market analyst at CMC Markets UK, said that global capital markets surged on the relief that the implosion of Chinese markets has “[…] if not been prevented, at least been put off for another day”.

Although there have been various interventions, Chinese markets are still dependent on their Government.

“Despite the panic that set in over the past five days, there is now an understanding that Chinese authorities will do “whatever it takes” to prop up stock prices. Nobody in China, including investors want to fight the Chinese government,” said Lawler.

Chinese equities are still a very volatile market, with ETFs themselves producing between 16 and 81 percent in the last year, depending on the index. Here are the top 10 performing Chinese equity ETFs on the London Stock Exchange over the last year. It really shows that the index and whether you choose offshore or onshore markets make all the difference.

10) PowerShares FTSE RAFI Hong Kong China UCITS ETF (PSRH) – 16.1 percent

This physical ETF costs 0.55 percent in annual fees and tracks an index of 31 stocks, mostly in financials, which make up over 67 percent of the fund. The top holding is a 10 percent weighting in insurance company AIA Group.

9) HSBC MSCI China UCITS ETF (HMCH) – 20.2 percent

8) db X-trackers MSCI China TRN Index UCITS ETF (XCX6) – 20.7 percent

7) Amundi ETF MSCI China UCITS ETF (CC1) – 22 percent

These three ETFS track the same index of Hong Kong-listed shares, with a lower weighting – nearer to 40 percent – to financials. Amundi has the lowest annual fees of the three at 0.55 percent, and is also the only one to synthetically replicate its index, which helps to explain its outperformance.

6) iShares China Large Cap UCITS ETF (FXC) – 22.9 percent

This ETF is one of the oldest and largest ETFs in this segment, having launched in 2004 and now standing at over $1.1 billion in assets. It physically tracks an index of 51 large caps, with around half the fund in financials and around 13 percent in energy stocks. The annual fees are rather hefty at 0.74 percent.

5) db X-trackers FTSE China 50 UCITS ETF (XX25) – 23.5 percent

This fund tracks the same index – the FTSE China 50 – but costs less at 0.60 percent. The fund was set up in 2007 and has grown to $436 million AUM.

4) Lyxor UCITS ETF China Enterprise HSCEI C-USD (ASIL) – 24 percent

Lyxor’s offering costs 0.65 percent per year and synthetically replicates an index of 40 Chinese stocks. It has the highest weighting to financials on this list at a whopping 70.4 percent of the exposure.

3) ETFS-E Fund MSCI China A GO UCITS ETF (CASH) – 69.1 percent

This is only one of two physically replicated ETFs on the list that tracks the Shenzhen and Shanghai-listed A-shares market in China. Annual fees amount to a lucky 0.88 percent, and it tracks a truly diversified index of 577 stocks. It also has the lowest weighting to financials at 31 percent of the fund.

2) db X-trackers CSI300 Index UCITS ETF-EUR (XCHA) – 69.8 percent

This synthetic ETF costs 0.50 percent and replicates an index of 299 stocks. It has the second lowest overall weighting to financials at 36 percent, and a higher allocation at 19 percent to industrials.

1) CSOP Source FTSE China A50 UCITS ETF (CHNA) – 81 percent

Is it any surprise that the top performer has the highest fees? At 1.1 percent, this fund isn’t cheap, but not many investors can argue with 81 percent returns in 12 months. It is the oldest physical A-shares ETF in Europe, and over the last year has offered superior returns to the onshore market.