Unless you haven’t been paying attention, you already know that China has one of the fastest growing economies in the world. Money is pouring into the country at an unbelievable rate. Want to know how your portfolio can benefit from the growth? Read on…
The easiest way to gain exposure to the boom going on in the far east is through a China ETF. In case your not familiar with the ETF investment vehicle, here’s the skinny. ETFs are internally diversified, like a mutual fund. But, unlike a mutual fund, and ETF can be traded intra-day (like a stock). And ETFs cost far less than typical mutual funds.
How do you buy a China ETF? First you have to pick a China ETF. There are a few options with some differences.
- PGJ – Golden Dragon China
- FXI – iShares China 25 Index Fund
- GXC – SPDR S&P China ETF
Each of these specific China ETFs differs in its underlying investments and cost. So, do some research to find out which China ETF is right for you.
The PGJ China ETF seeks to correspond to the Halter USX China Index(SM) and has an expense ratio of .71%. In contrast, the FXI China ETF seeks to mirror the FTSE/Xinhua China 25 index and has an expense ratio of .74%.
Regardless of which specific China ETF you choose, you’ll still get diversification and low cost of ownership that almost any ETF offers. With ETF investing, you get the best of stock investing (ease of trading) and the best of mutual fund investing (built-in diversification) all in one investment vehicle.
Investing in emerging markets can be highly risky and highly rewarding. As noted above, do your homework before jumping into a China ETF investment.