Investors can also choose from a fund that is aimed squarely at the consumption-boosting goals of the current Five-Year plan. The KraneShares CSI China Five Year Plan ETF (KFYP), which is up roughly 30 percent since it was launched a year ago and carries a 0.68 percent expense ratio, is a clear beneficiary of the rising consumption trends. A heavy emphasis on Internet stocks helps explain the strong first-year results for this fund.
“E-commerce in China is taking off and that’s really part of the new China, which is performing better than the legacy parts of the economy such as banks and airlines,” says KraneShares’ managing director Brendan Ahern.
BlackRock’s iShares division offers four China ETFs, though Richardson suggests investors start building exposure to China through the iShares MSCI China ETF (MCHI), which owns a roster of 142 blue chip stocks. She also notes that the iShares MSCI China Small-Cap ETF (ECNS) can help more squarely focus on Chinese domestic consumption patterns. “It’s a nice pair with the MCHI fund,” she says.
Both funds carry a 0.61 percent expense ratio.
A half-decade of underperformance makes Chinese stocks among the most inexpensive of any major market. Though the Chinese economy may experience hiccups in coming years, the long-term growth trajectory or the world’s second-largest economy is simply too great to ignore.