Consider a Broad Investment in China

Doug Fabian

Doug Fabian is known for his expert knowledge of ETFs, bear funds and enhanced index funds to profit in any market climate.
[Great Wall of China]

China’s growth is assured by its rising population, which already is the world’s largest. As long as broader industrialization continues, drawing peasants into the ever-increasing number of Chinese cities and factories to fuel Western-style consumption, China’s economy will continue to grow. However, it is difficult to know what sectors will benefit the most.

The Chinese government has its proverbial thumb on the scale, picking winners and losers; business transparency is not yet part of the culture. Western investors also are handicapped in understanding the consumption habits of the Chinese consumer. One way to invest in China without trying to pinpoint a breakout sector is through SPDR S&P China ETF (GXC).

GXC is a fund which, before fees and expenses, attempts to match the performance of a market-capitalization-weighted index. That index seeks to define and measure the investable universe of publicly traded companies domiciled in China and available to foreign investors. This non-diversified fund employs a sampling strategy and invests a substantial amount of its assets in securities comprising the index or in depository receipts representing securities comprising the index.

20131106-gxc-mma

GXC has gained 1.48% this year, recovering from a sharp drop this summer. Last year, the fund rebounded nicely from a June slump to end the year up 18.92%. The current yield is 2.13%.

GXC is invested in the areas you would expect for an all-China fund: financials, 32.37%; information technology, 17.24%; energy, 11.52%; as well as industrials, telecommunication services, consumer discretionary and consumer staples. Its top 10 investments account for 42.78% of its holdings. Among these are China Construction Bank Corporation H Shares, 6.85%; Tencent Holdings Ltd., 5.88%; China Mobile Ltd., 5.82%; Industrial and Commercial Bank of China Ltd. H Shares, 5.79%; and Baidu Inc. Sponsored ADR Class A, 4.44%.

We now live in a world where considering at least a little exposure to the most-populous country on Earth makes sense. But peering over the Great Wall to figure out what will rise to the top can be difficult. SPDR S&P China ETF (GXC) lets you invest in the idea that China will rise, without being too concerned about what sectors, exactly, are going to succeed there.

If you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my Successful Investing newsletter. As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

Related ETF Talks

previous article

A report last week of near-absent inflation in the euro zone led investors to speculate that the European Central Bank (ECB) would issue an interest rate cut this Thursday.

PREMIUM SERVICES FOR INVESTORS

Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

Product Details

LEARN MORE HERE

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays.

Product Details

LEARN MORE HERE

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker,
financial journalist, and money manager. As well as a book author and regular contributor to
numerous investment websites, Jim is the editor of:

Product Details

LEARN MORE HERE

Bob Carlson

Bob Carlson provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

LEARN MORE HERE

Hilary Kramer

Hilary Kramer is an investment analyst and portfolio manager with 30 years of experience on Wall Street. Since 2010, Hilary's financial publications have provided stock analysis and investment advice to her subscribers:

Product Details

LEARN MORE HERE

Jon Johnson

Jon Johnson's philosophy in investing and trading is to take what the market gives you regardless if that is to the upside or downside. For the past 21 years, Jon has helped thousands of clients gain success in the financial markets through his newsletters and education services:

Product Details

LEARN MORE HERE

DividendInvestor.com

Used by financial advisors and individual investors all over the world, DividendInvestor.com is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

LEARN MORE HERE