Should You Buy China ETFs Now?

• (1:20) - Should Investors Consider Investing In China?
• (4:45) - China A Shares ETFs Outperformance
• (8:00) - Breaking Down China’s Different Share Classes
• (16:30) - Overview of DWS Investment Management's Suite of China ETFs
• (23:15) - What To Expect From DWS In The Future
• (28:05) - Episode Roundup: Podcast@Zacks.com

In this episode of ETF Spotlight, I speak with Luke Oliver, Managing Director & Head of Index Investing, Americas, at DWS Investment Management. We discuss the Chinese market and Xtrackers’ suite of China ETFs.

Many investors have avoided Chinese stocks and ETFs this year due to trade war related concerns. Further, protests in Hong Kong have also discouraged investors.

But China’s growth story is about rising middle class with increasing disposable incomes and consumption, which cannot be overlooked. Ray Dalio, founder of the world’s largest hedge fund, Bridgewater, said recently “not investing in China is very risky.” Should investors consider China ETFs now?

While broad China ETFs, such as the iShares China Large-Cap ETF (TE:FXI) , have struggled this year, A-shares ETFs that focus on stocks listed on the mainland, have done pretty well. Major index providers are increasing the weighting of China A-shares in their global benchmarks, which will pull tens of billions of dollars into these stocks.

What does it mean for investors? We also discuss the alphabet soup of share classes in China.

The Xtrackers Harvest CSI 300 China A-Shares ETF ASHR holds about 300 largest and most liquid stocks in the China A-share market.

The Xtrackers MSCI China A Inclusion Equity ETF ASHX is designed to track progressive partial inclusion of A shares in the MSCI Emerging Markets Index over time.

The ASHS Xtrackers Harvest CSI 500 China-A Shares Small Cap ETF ASHS is the first US listed ETF to provide access to small-cap companies in the China A-share market.

The Xtrackers MSCI All China Equity ETF (TSXV:CN) provides exposure to all Chinese share classes listed in Hong Kong, Shanghai and Shenzhen. Chinese tech giants --Alibaba (NYSE:BABA) and Tencent (OTC:TCEHY) —are among its top holdings.

Earlier this year, DWS launched the Xtrackers MSCI USA ESG Leaders Equity ETF USSG, which was developed in collaboration with Ilmarinen, Finland’s largest pension insurance company. USSG is one of the most successful ETF launches of all time. With an expense ratio of just 10 basis points, it is one of the cheapest ESG ETFs.

To learn more about these ETFs, please visit DWS.com.

Make sure to be on the lookout for the next edition of ETF Spotlight! If you have any comments or questions, please email podcast@zacks.com.

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