Best Chinese ETFs

[LearningMachine]

It came up at the Berkshire AGM yesterday that the number of Chinese companies in the top 20 list will probably be higher than 3 thirty years from now.  Their valuation will likely be also order(s) of magnitude higher than today's valuations.  

 

What do folks think would be the best ETF to take a cut of Chinese economic transactions, and grow along with the Chinese economy? 

Edited November 13, 2025 by LearningMachine

[Lakesider]

I just went with a low cost one, Vaguard total china. 

[thowed]

I'm not sure about ETFs - I think China currently has relatively inefficient indices, so you're arguably better off going Active.

 

There are some interesting boutiques (most that I know are non-US), but JP Morgan have a solid team - their China fund is a bit like a Growth ETF (i.e. not that concentrated) but most holdings are decent quality.  I see it as a decent high-ish beta play.

Baillie Gifford have, I think, a new-ish mutual fund in China A-Shares which looks really interesting - concentrated portfolio.  They are a Growth house, just set up an office in Shanghai, & while I sometimes disagree with their thinking, overall they're a pretty decent firm.

[TwoCitiesCapital]

1 hour ago, LearningMachine said:

Has anyone looked into HangSeng Tech Index ETF, e.g. BlackRock 9067.HK with 0.25% Management fee? 

 

It doesn't include China Mobile.  However, I noticed other HangSeng Index ETFs do include China Mobile, which we are not allowed to own. 

 

What happens if a Hong Kong based ETF you have a position in owns a Chinese company that we are no longer allowed to own in the future?  I know U.S. based indexes remove those from the index.  However, looks like Hong Kong based indexes don't. 

 

Has anyone looked into the details of the law here?  Last time I read it, it was so vague that brokerages were having a hard time interpreting it.

 

I don't know if the ETFs are forced to sell, rather just not buy more. 

 

I own China Mobile via IB and am an American citizen. I can't add to the position, but wasn't forced to sell it. I would assume ETFs might be similar in that they could just direct new flows to all the names that aren't China Mobile. Though, operationally they may just choose to sell it to avoid the headache

[TwoCitiesCapital]

40 minutes ago, LearningMachine said:

This is not legal advice, but my understanding is that you have to divest direct ownership in certain companies, e.g. China Mobile. 

 

Here is the executive order Trump signed: https://home.treasury.gov/system/files/126/13959.pdf

Biden expanded the EO: https://www.whitehouse.gov/briefing-room/statements-releases/2021/06/03/fact-sheet-executive-order-addressing-the-threat-from-securities-investments-that-finance-certain-companies-of-the-peoples-republic-of-china/

 

Here is an interpretation by a law-firm: https://www.akingump.com/en/news-insights/new-executive-order-restricts-us-persons-from-trading-in-publicly-traded-securities-and-derivatives-of-certain-communist-chinese-military-companies-effective-january-11-2021.html

 

 

We'll see. I'll rely on IB to notify me if forced sale. They'll be the ones held accountable for enforcement. So far, I've just been told I can't buy more. 

 

Though it looks like from what you've linked that owners are provided 365 days to divest so we'll see. That'll be coming up in the next 4 months or so. 

 

Also, to clarify, I own the Hong Kong shares directly and not a US traded ADR so maybe that matters as well. 

Edited July 8, 2021 by TwoCitiesCapital

[CGJB]

I reside in the US and use Charles Schwab. They told me you can buy China Mobile, CNOOC, etc. in Hong Kong but you can't sell them after Biden's executive order expires, unless he extends it. IIRC, his order expires on August 2, though I could be wrong.

[UK]

https://www.bloomberg.com/news/videos/2021-08-05/kraneshares-cio-on-alibaba-tech-shares-video

[formthirteen]

Here's an interesting comparison between KraneShares top holdings and comparable U.S. businesses:

 

 

Tencent owns shares in at least three of those companies...

 

Link to video:

 

 

[flesh]

Tal not doing so well. 

[UK]

I have no issues with going just with Alibaba and Tencent, especially for the long term, however, sometimes and when market dislocation is strong, it just makes sense to go for lower quality. Somebody very accurately has pointed in different topic, that simplest way to go in spring of 2020 (or 2009), was just by buing some small cap or small cap leveraged etf for US and not blue chip stuff. And perhaps later you can switch back. I am not sure this situation is the same, but simply by looking at price you can see, that KWEB is off more. Edutech is presumably toast but prices of those companies are like -90. I wouldnt touch any of them in meaningful way, but as a small diversified basket now comprising only few percent of that ETF, I donnt know. Also there are conflicting ideas who would benefit more (or better to say lose less?) from more regulations, presumably smaller companies would win, thought i am not sure.

Edited August 6, 2021 by UK

[UK]

Re delisting: I donnt know if it is high, maybe I am making a mistake here, but I donnt see delisting worries as material, at least comparing to other issues:). And if it is real, then why US listed Chineese company cannot list in HK, like Alibaba did?

 

You are right, I didnot consider this, because I was talking from a different tax regime point of view:), but if you etf will perform better and after switching you have to pay some more taxes is it a big problem if in the end you still are left with larger profit?

Edited August 6, 2021 by UK

[TwoCitiesCapital]

On 7/8/2021 at 3:16 PM, TwoCitiesCapital said:

 

We'll see. I'll rely on IB to notify me if forced sale. They'll be the ones held accountable for enforcement. So far, I've just been told I can't buy more. 

 

Though it looks like from what you've linked that owners are provided 365 days to divest so we'll see. That'll be coming up in the next 4 months or so. 

 

Also, to clarify, I own the Hong Kong shares directly and not a US traded ADR so maybe that matters as well. 

 

Just following up here - 

 

We're passed the 365 day limit and IB still has not enforced sales in my account.