From 2003 through 2008, China’s annual GDP growth rate ranged from 9.1% to 12.1%, hitting $4.3 trillion in 2008. By 2020, the size of the Chinese economy is expected to be the second largest in the world behind the US.
China’s economy has created a significant middle class and, as a result, a consumer economy is emerging. In addition, the manufacturing and service industries in China are undergoing significant development, transformation and growth.
Prior to 2004, the only way to gain exposure to China through ETFs was via a broad emerging markets fund. iShares then brought the first China-specific ETF to market with its FTSE/Xinjua China 25 Index Fund ETF. The ETF now holds nearly $6 billion in assets and leads a pack of six relatively broad ETFs covering China. In addition, there is a single ETF covering small-capitalization Chinese companies, another covering real estate and two covering China’s currency.
While the selection of vehicles for investing in China has expanded significantly over the past five years, look for continued innovation as the ETF industry develops, as the Chinese economy grows, and as investment access in China improves.
Below is a list of ETFs commonly used to access the Chinese market today:
| Exposure | Sponsor | Fund | Ticker | ||||
| China only | ishares | FTSE/Xinhua China 25 | FXI | ||||
| China only | SSgA | SPDRS S&P China | GXC | ||||
| China only | PowerShares | Golden Dragon USX China | PGJ | ||||
| China only | Claymore | China Small Cap Index ETF | HAO | ||||
| BRIC | Claymore | BRIC ETF | EEB | ||||
| BRIC | ishares | MSCI BRIC | BIK | ||||
| Chindia | ishares | FTSE Chindia | FCHI | ||||
| Chindia | First Trust | ISE Chindia | FNI | ||||
| Real Estate | Claymore | China Real Estate | TAO | ||||
| Currency | WisdomTree | Yuan Fund | CNY | ||||
