“Hope this message finds you both in good health and spirit.
“I have been looking to add some exposure to the China middle class growth theme. The Asian Prosperity Fund suggested by Tim Price seemed an interesting choice since it attempts to marry value, dividend growth, and the growth of the middle class consumer in China. Unfortunately, it is domiciled in Luxembourg and not available to U.S.investors. I have not looked at other mutual funds, but in the ETF space, the only fund that seems to have any similarity is CHIQ, run by Global-X Advisors. Any suggestions on alternatives in this space, preferably un-hedged. I also have interest in the Chinese Health Care and Environmental sectors.”
Eoin Treacy's view Thank you for this question which others may also find of interest. US investors are presented with a number of challenges in accessing overseas funds because of the onerous demands put on fund houses by the IRS. An additional challenge in locating funds that offer exposure to the Chinese consumer, healthcare and environmental sectors is that these are comparatively small segments of the overall market and most funds tend to track the benchmark by buying large caps.
Following a search of Bloomberg this morning, The Global-X products you mention appear to be the only funds available to US investors that offer a pure play on Chinese sectors. The Guggenheim China Technology ETF holds a number of technology and green energy companies and may merit some additional investigation. If subscribers can suggest any others I would be happy to add these to the Chart Library.
One point to consider is that while the focus of official policy is to promote a consumer economy, actions to date have been supportive of the banking sector. The changing of restrictions on how many bank shares insurance companies can own and the raising of QFII and RQFII limits have helped to increase investor interest in the sector. Most of the banks are dual listed in Hong Kong.
A review of China related closed-end funds from December 14th may also be of interest.