China ETF — iShares MSCI China ETF (MCHI)
As China ETFs go, the iShares MSCI China ETF (MCHI) is one of the biggest available in terms of net assets, with $845 million under management. Tracking the MSCI China Index, which iShares describes as a “free-float-adjusted market capitalization-weighted index designed to measure the performance of equity securities in the top 85% of Chinese equity markets,” this is the most conservative of my three selections.
In the course of a year, it turns about 10% of its overall portfolio, providing a very stable, long-term investment. This China ETF is inexpensive for an emerging market ETF with a net expense ratio of 0.61% (or $61 for every $10,000 invested), and its top 10 holdings represent 51% of its overall portfolio. Of the 142 holdings, 32% are financial stocks with energy and technology rounding out the top three sectors of Chinese stocks.
Although Morningstar gives this China ETF just two stars, I believe it’s a good fund to own because almost the entire ETF is composed of large- or giant-cap Chinese stocks. And investors interested in income will like the fact its 12-month trailing yield is 2.61%.
Bottom line: MCHI is a good, all-around China ETF.