There are a number of reasons why investors should be interested in China.
The main one is the economy’s growth rate. Although growth has slipped over the last couple of years, Chinese economic output is still increasing close to 7% annually. And that’s despite the continued efforts of the rich to get assets out of the country.
This growth is lifting millions of citizens from poverty to middle class. This is creating a massive opportunities to sell these folks everything from electronic gadgets to their first cars to even real estate.
Finally, it’s cheap. Chinese stocks are, on average, about 40% cheaper than North American ones.
There are a couple of ways Canadian investors can get exposure to the world’s second-largest economy.
The first option is the BMO China Equity Index ETF (TSX:ZCH), which holds 42 different Chinese stocks that have New York Stock Exchange listings. The fund is quite small, with only $16 million in assets, and only trades approximately 1,000 shares per day.
It also has a high management expense ratio of 0.72%, although that is much lower than any China-specific mutual funds.
The other choice for Canadian investors is the iShares China Index ETF (TSX:XCH), which is a little bigger, with some $30 million worth of assets and average daily volume of nearly 3,700 shares.
It holds just one position, which is a U.S.-traded large-cap China ETF. That ETF holds 51 of China’s largest stocks, including companies that trade only in China. It also has a high management fee, coming in at 0.86%.
