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As China Rebounds, Other ETFs Join FXI on the Upside


Here's a list of China ETFs to consider.

Those looking to make a long-term better on China should note GXC has a lower expense ratio than FXI and over the past five years, one year and year-to-date, GXC has obliterated FXI in terms of performance.

WisdomTree China Dividend Ex-Financials Fund (NASDAQ:CHXF): Many China ETFs represent a dividend dichotomy. A fair amount of China's state-run enterprises pay decent dividends, which have grown over time, but that is not reflected in the yields of major China ETFs. For example, both FXI and GXC yield less than 3%.

To that end, the introduction of CHXF is well-timed. Energy names, which are fair yielders by Chinese standards, account for almost a quarter of CHXF's weight. The exclusion of bank stocks could prove even more important. Last month, the China Securities Journal reported regulators may pare payout ratios for bank dividends in China so the institutions can retain more capital. That means CHXF is clear of possible dividend cutters. In just one of trading, the ETF has accumulated $18.4 million in AUM.

Global X China Industrials ETF (NYSEARCA:CHII): China has been trying to reduce its dependence on exports and those efforts to engineer increased domestic consumption have weigh on margins for industrial stocks. Slack economic growth through the first three quarters of this year also dampened the sector's profits. The sector is also wrestling with over-investment during China's boom years.

All of that should be bad news for CHII, but the fund has jumped 12.3% in the past month. The calls that Chinese equities are cheap pertain to CHII's constituents as well. CHII's price-to-earnings ratio of 11.28 and a price-to-book ratio of 0.87 imply the fund is cheap relative to FXI, which trades at 12.5 times earning with a price-to-book ratio of 1.55.

China's plans to boost railway spending by 16% could mean more upside for CHII because the ETF devotes more than 15% of its weight to railroad stocks.

Editor's Note: This content was originally published on by The ETF Professor

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