Chinese Funds’ First-Half Rise Outstrips Alternatives

Doug Fabian

Doug Fabian is known for his expert knowledge of ETFs, bear funds and enhanced index funds to profit in any market climate.
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Rounding out the category of the top three emerging market exchange-traded funds (ETFs) for the first half of this year is another Chinese small-cap fund, iShares MSCI China Small-Cap ETF (ECNS).

Rather than focus on any specific market exchange, this fund holds a swath of Chinese small-cap companies. During the Chinese bubble earlier this year, the performance of ECNS ranked among the strongest emerging market funds because small-cap stocks tend to make bigger moves than their larger counterparts.

View the current price, volume, performance and top 10 holdings of ECNS at

Assets managed for this fund at the mid-year mark totaled $48.39 million. This amount falls beneath my recommended threshold for investment. However, this ETF’s strategy is one that is worth bringing to your attention. My view is that the more knowledge you have as an investor, the better you can make informed decisions.

A return of 27.63% from January to June earned this fund its position as the third-best emerging market fund for the first half of 2016. It also added a 2.77% yield to its total return during that time. As the chart below shows, this strong performance has not held up in recent months.


The top 10 largest positions in this fund comprise 11.01% of those assets. The top five of these are Shenzhen International Holdings Ltd., 1.42%; Sunny Optical Technology Ltd., 1.25%; Skyworth Digital Holdings Ltd., 1.21%; Minth Group Ltd., 1.10%; and China Traditional Chinese Medicine Co. Ltd., 1.08%. The most prominent sector holdings for ECNS are in consumer cyclicals, technology and real estate.

If you expect a turnaround in Chinese small caps, iShares MSCI China Small-Cap ETF (ECNS) could be a good way to gain broad exposure to that market segment.

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Remember to look for the current price, volume, performance and top 10 holdings of ECNS at

If you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my Successful ETF Investing newsletter.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an e-mail. You just may see your question answered in a future ETF Talk.

In case you missed it, I encourage you to read my e-letter column from last week about an outperforming Chinese fund. I also invite you to comment in the space provided below.

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As you know, earnings season, the time in which public companies report their revenue and earnings performance for the prior three months, can be exciting if companies meet or beat Wall Street expectations. The excitement can build if a company beats those expectations and raises its guidance for what lies ahead. The mirror image of that, however, can be rather painful to watch and also to your holdings.

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