3 ASX ETFs for China’s Recovery

Many investors have begun looking towards China to take part in their expected economic recovery assuming they avoid a second wave of COVID-19. Here are three ASX ETFs that provide exposure to China.

VanEck Vectors FTSE China A50 ETF

The VanEck Vectors FTSE China A50 ETF (ASX: CETF) provides exposure to the 50 largest listed companies in mainland China. What you can expect from these 50 companies is a large exposure to financials (about 45% of the portfolio) and consumer staples (around 20%). CETF is the cheapest of the three ETFs on this list, with a management fee of 0.6% per year.

In terms of performance, CETF has struggled, returning 3.09% per year since inception in 2010. Although the fund has operated for a number of years, it was only listed as an ETF in October last year. Over the last 12 months, CETF is up around 1.5% despite the drops experienced over the last few months. However, looking more closely at the returns, it becomes clear that the positive returns are largely supported by the annual dividend, while capital growth has been flat or negative.

More info can be found in our CETF report.

iShares China Large-Cap ETF

The iShares China Large-Cap ETF (ASX: IZZ) is very similar to CETF, offering access to the 50 largest listed companies in mainland China. While IZZ charges a higher management fee of 0.74%, it has also shown stronger performance than CETF, up 4.74% per year over the last 10 years and 3.34% over the last 12 months.

While these two ETFs both track the FTSE China A50 Index, performance differs as a result of the fact that CETF was, until April 2020, tracking the CSI 300 Index. So, if you’re considering one of these ETFs than IZZ may seem more attractive for its past performance but going forward it is likely that IZZ and CETF will have very similar returns, and CETF still currently offers lower management fees.

You can read more about IZZ here.

VanEck Vectors China New Economy ETF

The third ETF on this list, the VanEck Vectors China New Economy ETF (ASX: CNEW) has a very different risk-reward profile than the first two. CNEW provides exposure to Chinese companies in the ‘new economy’, which in this case refers to technology, healthcare, consumer staples and consumer discretionary companies.

While CETF and IZZ both have very high exposure to financials, CNEW’s biggest sectors are food, beverage and tobacco, pharmaceuticals, healthcare, and technology, and in total CNEW has 120 holdings. The result of this different focus is a return of 30.37% over the last 12 months.

This return seems to justify the higher management fee of 0.95% each year but note that this is still towards the high-end of ETF management fees.

My Take

These three options each have their merits and CETF and IZZ could certainly be considered the ‘safer’ options. CNEW has shown great returns over the last 12 months but the fund still has a short track record and is yet to really reach scale with net assets of $71.5 million. While I wouldn’t rush into buying CNEW shares, I do believe it’s a fund worth keeping an eye on as China’s economy bounces back.

Disclaimer: At the time of writing, Max does not own shares in any of the companies mentioned.

From 200+ ETFs in Australia, our top investment analyst has just identified his #1 ETF for 2021 and beyond.

Low fees? Check.

Long-term growth potential? Check.

Regular cash returns? Check!

This ETF makes investing in ETFs "Super-Easy".

Simply click here or enter your email address below to access the full ETF report, ticker code, and step-by-step investment guide. Our expert's #1 ETF report is completely free.

No gimmicks, no payment, no credit card info. Just enter your email address below and we'll send you the report right away.

From 200+ ETFs in Australia, our top investment analyst has just identified his #1 ETF for 2021 and beyond.

Low fees? Check.

Long-term growth potential? Check.

Regular cash returns? Check!

This ETF makes investing in ETFs "Super-Easy".

Simply click here to access the full ETF report, ticker code, and step-by-step investment guide. Our expert's #1 ETF report is completely free.

No gimmicks, no payment, no credit card info. Just click the link below and enter your email address. We'll send you the report right away.

CLICK HERE TO GET THE REPORT

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

Keep reading:

General Financial Advice warning
The information on this website is general financial advice only. That means, the advice does not take into account your objectives, financial situation or needs. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. Please read our Terms & Conditions and Financial Services Guide before using this website.

© Rask Australia 2020

Join 20,000+ smart investors

Join the Rask Australia mailing and we’ll send you free investment reports, podcasts, expert insights, investing courses, ASX news and lots, lots more. All free. 

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian-owned.

feedback-icon

What can we do better?

Howdy, ASX investor.

I really care about your experience today.

Please, let me know if you have any suggestions we can use to improve our site and help others invest in ETFs. 

Cheers! 

Owen Rask