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Best & Worst Among China ETFs YTD

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Cinthia Murphy, Managing Editor, ETF.com

It’s been a difficult year for China ETFs.

The Shanghai Composite Index has been hovering at a four-year low amid lack of investor confidence that a U.S.-China trade deal, beneficial to both sides, can actually be struck before March.

Among the year’s worst-performing funds are those focused on China’s mainland market, or A-shares, as well as ETFs tapping into technology stocks. Funds such as the Xtrackers Harvest CSI 300 China A-Shares ETF (ASHR), which is down 23%; the tech-heavy Invesco China Technology ETF (CQQQ); and the leveraged Direxion Daily CSI China Internet Index Bull 2X Shares (CWEB).

Worst-Performing China ETFs Of 2018

Note: Data measures total return for the year-to-date period through Dec. 5.

Only three China ETFs outside of inverse plays have managed to eke out gains this year, and only one of them is an equity ETF—the Global X China Energy ETF (CHIE), which focuses on Chinese energy companies. Other gainers in 2018 include the fixed-income-focused VanEck Vectors ChinaAMC China Bond ETF (CBON) and the currency-focused Market Vectors Chinese Renminbi/USD ETN (CNY).

Top-Performing China ETFs Of 2018

Note: Data measures total return for the year-to-date period through Dec. 5.

Emerging Markets Also Struggling

Beyond China, emerging markets in general have had a difficult 2018 so far, in the face of such things as a strong dollar, ongoing trade tensions and waning global growth. That isn’t to say investor demand for emerging market ETFs has dried up, but it’s been all over the board.

The iShares Core MSCI Emerging Markets ETF (IEMG), for instance, has gathered an impressive $14.5 billion year-to-date, making it one of 2018’s most popular ETFs. Its counterpart, the iShares MSCI Emerging Markets ETF (EEM), however, has bled $4.7 billion year-to-date. Both funds track MSCI benchmarks and include South Korea among top holdings, but IEMG costs 0.14% in expense ratio, or about a fifth of EEM’s cost.

The Vanguard FTSE Emerging Markets ETF (VWO)—the biggest emerging market ETF today, with $57.7 billion in total assets—has seen $834 million in assets leave the fund year-to-date. But the $4.9 billion Schwab Emerging Markets Equity ETF (SCHE)—costing only 0.13% in expense ratio—has attracted $660 million in net creations. Both VWO and SCHE track FTSE benchmarks that exclude South Korea.

And then there’s the $1.8 billion SPDR Portfolio Emerging Markets ETF (SPEM), which tracks an S&P benchmark that also excludes South Korea. The 1,400-security fund has gathered nearly $1 billion in net assets so far this year. SPEM is the cheapest of them all, at 0.11%.

Driving that disparity in demand seems to be a strong preference for cheapest-as-possible ETFs in the segment, probably given how poorly these funds have performed this year, as well as personal investor views on South Korea.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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