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China A-Shares ETFs Explained

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When investors think about buying shares in the Chinese market, they usually focus in on the iShares China Large-Cap ETF (FXI). This ultra-popular fund provides exposure to some of the largest companies based in the nation, and it sees great volume on a daily basis.

However, the Chinese market is slowly starting to become more transparent, and there are plenty of other choices out there. And with the latest round of reforms coming out of China, many are a bit more optimistic on the nation’s long term growth trajectory (see China ETF Investing 101).

How to Play

So instead of the ultra-large cap focused FXI, investors may want to consider the China A-Shares market. This corner of the investing world is closed off to many Western investors, but it is slowly beginning to open up.

As of right now, one of the only ways to target these companies—many of which aren’t found in other investment vehicles—is by buying a China A-Shares ETF. There are three such funds occupying this corner of the market and they each go about obtaining exposure to this closed-off market in different ways:

  • Market Vectors China A Shares ETF (PEKETF report) – The oldest in the space, this fund uses swaps to achieve exposure though it could gain direct access soon.
  • PowerShares China A Shares Portfolio (CHNAETF report) – This is the cheapest fund in the segment, and it uses futures listed on the Singapore stock exchange to obtain its exposure.
  • db X-trackers Harvest CSI 300 China A-Shares Fund (ASHRETF report) – Although this is easily the most expensive of the group, it is by far the most popular and it is the only (at time of writing) to offer direct exposure to the market.

More Information

There are a couple other items that investors should note about China A-Shares ETFs and how they are different from others currently on the market. We have highlighted many of these in our short video below, make sure to watch!

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