China ETF With Reasonable Fees
While low fees don’t guarantee better performance, they certainly can’t hurt. According to ETF Database, there are seven China ETFs with five-year track records. Of those the iShares MSCI Hong Kong ETF (EWH) has the cheapest management expense ratio at 0.51% annually — or $51 per $10,000 invested.
Its biggest holding is AIA Group (AAGIY), the largest independent, publicly listed pan-Asian life insurance company, with a weighting of 16%. The top 10 holdings account for 61% of the ETF’s $2.1 billion in total net assets. Financial stocks represent a lion’s share of the portfolio with a 58% weighting. Consumer discretionary, industrials and utilities represent most of the remaining assets.
If you’re as fascinated by conglomerates as I am, you’ll like the fact its third-highest weighting is Cheung Kong Holdings (CHEUY), the personal holding company of billionaire Li Ka-shing. Its performance hasn’t been that great compared to its real estate peers, but that’s partly due to its conglomerate discount.
It’s important to keep in mind that this China ETF tracks the MSCI Hong Kong Index, which invests in stocks traded on the Hong Kong Stock Exchange. Many of these companies have significant business interests outside China, providing some additional geographic diversification. With little turnover (12% in latest fiscal year) it’s a good buy-and-hold proposition.