I normally pick the oldest ETF in a category to show how that category has performed over a long period of time. This time I have chosen the second oldest China ETF, the Invesco Golden Dragon China ETF (PGJ), to display long term performance. The reasoning behind this is that PGJ is only 2 months younger that the iShares China Large-Cap ETF (FXI), and PGJ has superior long term performance to FXI.
Is China still worth the investment risk?
PGJ vs S&P 500 index fund: January 2005 – August 2019
Source: https://www.portfoliovisualizer.com/
PGJ vs SPY: December 9, 2004 – August 30, 2019
Source: https://www.koyfin.com/home
There are currently 43 ETFs available that have at least 50% of their portfolios allocated to China. Only 6 of the 43 have inception dates before 9/1/2009. Here’s how those 6 older ETFs ranked against each other.
Source: https://www.morningstar.com/
The 4 China ETFs with the best long term performance were FNI, GXC, PGJ and HAO. Here’s how they performed head-to-head.
FNI vs GXC vs PGJ vs HAO: February 2008 – August 2019
Source: https://www.portfoliovisualizer.com/
FNI vs GXC vs PGJ vs HAO: January 30, 2008 – August 30, 2019
Source: https://www.koyfin.com/home
Product details of the 4 China ETFs with the best long-term performance:
FNI – The First Trust Chindia ETF is an exchange-traded fund. The investment objective of the Fund is to seek investment results that correspond generally to the price and yield, before fees and expenses, of an equity index called the ISE ChIndia Index™. Establish the total population of companies that are domiciled in either India or China and whose shares or ADRs are listed on a U.S. securities exchange. Remove companies that do not meet the component eligibility criteria which include minimum market capitalization and trading volume requirements. Rank the remaining stocks by their liquidity score. (Rank all eligible stocks separately by market cap and three month average daily dollar volume. Sum the ranks for each stock to get a liquidity score.) Select the top 25 stocks from each country by liquidity score. If less than 25 stocks are available for a country, then continue selecting stocks from the other country until a maximum of 50 stocks are selected. Weight according to the following methodology: top three ranked stocks in each country are weighted at 7% each, the next three in each country are weighted at 4% each, the next three in each country are weighted at 2% each and the remaining stocks are equally weighted. The ISE ChIndia IndexTM is rebalanced on the application of the above model on a semi-annual basis.
GXC – The SPDR® S&P® China ETF seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the S&P® China BMI Index (the “Index”). Seeks to provide the investable universe of publicly traded companies domiciled in China that are available to foreign investors. Publicly listed companies with a float-adjusted market cap of $100M and at least $50M in annual trading volume are included in the Index.
PGJ – The Invesco Golden Dragon China ETF (Fund) is based on the NASDAQ Golden Dragon China Index (Index). The Fund generally will invest at least 90% of its total assets in equity securities of companies deriving a majority of their revenues from the People’s Republic of China and that comprise the Underlying Index. The Underlying Index is composed of US exchange-listed companies that are headquartered or incorporated in the People’s Republic of China. The Fund and the Index are rebalanced and reconstituted quarterly.
HAO – The Invesco China Small Cap ETF is based on the AlphaShares China Small Cap Index (Index). The Fund will generally invest at least 90% of its total assets in the securities (including American depositary receipts (“ADRs”) and global depositary receipts (“GDRs”)) that comprise the Index. The Index is designed to measure and monitor the performance of publicly-traded mainland China-based small-cap companies with a maximum $1.5 billion float adjusted market capitalization. The Fund and the Index are rebalanced annually.
Thank you for taking time to read this article. If you found it useful, please share it with a friend.
Respectfully yours, Micah McDonald, aka the Deep Value ETF Accumulator
Previous Deep Value ETF Accumulator articles on China Equity ETFs: SEPTEMBER 4, 2018 Own BABA BIDU BZUN CTRP EDU INFY JD MOMO WB WUBA YUMC YY With 1 ETF!
FEBRUARY 20, 2018 Best Long-Term Performance China Equity ETFs 1.1
Disclosure: We currently own shares of FNI and we intend to buy more shares in the future. I am not a professional investment advisor. Please perform you own due diligence or seek the advice of a Registered Investment Advisor before investing in any security mentioned in this article. This website contains affiliate links to M1 Finance and Google AdSense.
This article originally appeared on TalkMarkets right here: https://talkmarkets.com/content/etfs/best-long-term-performance-china-equity-etfs?post=232489