China continues to remain an attractive region for long-term equity investors given its growing GDP rates and a rise in purchasing power of the middle class. This means you will find multiple companies that are growing revenue and earnings at an enviable pace.
While picking individual stocks seems an attractive option, it makes sense to invest in exchange-traded funds, or ETFs, especially if you don’t have the time or expertise to analyze companies.
An ETF provides investors access to a basket of stocks which diversifies overall risks significantly.
Here, we look at three of the best Chinese ETFs, listed in the US, which have gained more than 20% over the past year.
KraneShares MSCI China Clean Technology Index ETF (NYSE Arca: KGRN)
The KraneShares MSCI Clean technology Index ETF or KGRN aims to track the performance of the MSCI China IMI Environment 10/40 Index. The index consists of companies that derive at least 50% of revenue from environment-focused products and solutions.
The KGRN ETF has gained 71% in the last 12-months easily dwarfing the S&P 500 ETF which is up close to 34% in this period.
With over $200 million in assets under management, the ETF has an expense ratio of 0.79%. The top five holdings of the ETF include NIO, BYD, Li Auto, XPeng, and Contemporary A that account for almost 45% of the fund.
China generates 31% of the world’s total renewable energy capacity and has allocated $360 billion to invest in this sector between 2017 and 2020. The country expects renewable energy to account for 35% of total electricity consumption by 2030.
iShares MSCI China Small-Cap ETF (NYSE Arca: ECNS)
The iShares MSCI China Small-Cap ETF or ECNS provides you exposure to small-cap companies in China. It looks to track the investment results of an index that consists of small-cap Chinese stocks available to investors.
The index has gained close to 31% in market value in the last year. Comparatively, it has generated annual returns of 8.9% in the last three years and 8.4% in the last five years.
With over $90 million in assets under management and an expense ratio of 0.59%, the ECNS ETF is an good bet for investors with a higher risk appetite. The top five holdings of the ETF include Dongyue Group, XTEP International, GCL-Poly EnergyHoldings, Lifetech Scientific Corp and Jinkosolar Holding that account for 11.5% of the ETF.
Related: Asia Markets analyzes 3 US-listed Chinese ETFs that have defied the recent market rout
Global X MSCI China Consumer Discretionary ETF (NYSE Arca: CHIQ)
The Global X MSCI China Consumer Discretionary ETF or CHIQ is the final ETF on my list. The fund has gained over 20% year to date and it aims to invest in large and mid-cap segments of the MSCI China Index that are part of the consumer discretionary sector.
With more than $700 million in assets under management, CHIQ has an expense ratio of 0.65%. The Index has returned 22.6% annually in the last five years and 8% in the last 10 years. Alibaba is the top holding of CHIQ that accounts for 8.7% of the fund. The other top holdings include Meituan, NIO, JD.com and Pinduoduo Inc.
If you have any other suggestions on the best Chinese ETFs, leave a comment below.