Exchange-traded-funds (ETFs) tracking Chinese equities have overtaken the S&P 500 index year-to-date after a breakout rally last month.
Up until late September, the S&P 500 index was on track to outperform all the other major developed and emerging market regions for the second year in a row.
But the most recent monetary support measures announced by the Chinese central bank, coupled with rumours of more fiscal stimulus, has boosted China’s equity market ahead that of the US year-to-date.
The MSCI China index is up 24.8% so far in 2024, compared with 23.7% from the S&P 500 index. Both are well ahead of global developed and emerging market equities as represented by the MSCI ACWI index, which is up 18.6%.
Indian equities were also on track to beat the S&P 500 index this year until a recent correction. Meanwhile Japanese equities have lagged recently, in part due to depreciation of its currency relative to the US dollar.
Although Chinese funds tracking the MSCI China index are undoubtedly outperforming the S&P 500, not all index funds tracking China are built the same.
Some ETFs tracking different China indices are well ahead – outperforming nearly all of their active peers in both China and active strategies in the US.
Below are some top-performing Chinese equity ETFs that are outpacing the S&P 500 index, according to data compiled from FE fundinfo*.
iShares China Large-Cap ETF
The iShares China Large-Cap ETF is a $10.2bn fund that tracks the FTSE China 50 Index as a benchmark.
It has exposure to 50 of the largest Chinese stocks listed on the Hong Kong Stock Exchange, including Meituan, Alibaba and Tencent.
It is up 35.4% year-to-date, and is managed by BlackRock’s iShares with a fee of 0.74%.
Xtrackers FTSE China 50 UCITS ETF
The Xtrackers FTSE China 50 UCITS ETF was another top performer, up 34.6% year-to-date.
As the name suggests, it also tracks the FTSE China 50 Index, and has benefited from a focus on China’s large cap stocks listed in Hong Kong.
Managed by German asset manager DWS Group’s Xtrackers, the $194m ETF has ongoing charges of 0.6%.
Ping An of China CSI HK Dividend ETF
The $196m Ping An of China CSI HK Dividend ETF was another standout performer year-to-date, up 31.3%.
This ETF tracks the performance of the CSI Hong Kong Dividend Index, which has just 30 constituent stocks.
Its concentrated holdings in names such as China’s national oil firm CNOOC Group (10.9%) and China Construction Bank (10.2%) has buoyed its returns.
Managed by Ping An of China Asset Management Hong Kong, the fund has a management fee of 0.55%.
LionGlobal OCBC Securities China Leaders ETF
The LionGlobal OCBC Securities China Leaders ETF also delivered top returns year-to-date, up 29.2%.
This $59m ETF tracks the Hang Seng Stock Connect China 80 Index, which captures the performance of the largest 80 Stock Connect-eligible Chinese firms.
These include firms listed in Hong Kong such as Tencent (8.4%), as well as those listed on the Shanghai Stock Exchange, such as Kweichow Moutai (4.8%).
Managed by Singapore headquartered OCBC Bank, this ETF has a management fee of 0.45%.
*The fund performance was measured in US dollar terms based on data from FE fundinfo. The funds only include products that fall under the relevant Hong Kong SFC Authorised Mutual or Singapore Mutual sectors as classified by FE fundinfo.
