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Best Chinese ETF to Invest In

China, Asia’s largest economy, has only just started opening up its mainland stock market to the rest of the world and the opportunities for investors are numerous. Chinese ETFs offer investors the perfect way to access the rapidly developing market. 

In this guide, we reveal the best Chinese ETF UK you can invest in today. We’ll also take a look at some other top Chinese ETFs, explain how they work, and show you how to invest without paying any commission.

Key points on Chinese ETFs

  • Chinese ETFs provide exposure to one of the world’s most rapidly developing financial markets and offers a wide range of investment opportunities.
  • Some of the best Chinese ETFs are the KraneShares MSCI China Clean Technology Index ETF, the HSBC MSCI China UCITS ETF, and the Xtrackers Harvest CSI 300 China A-Shares ETF.
  • Although the growth of Chinese is appealing, you should bear in mind that there are also risks, such as trade tensions with the US.
  • If you want to invest in Chinese ETFs, you can do so without paying any commission using our recommended ETF broker, eToro.

Best Chinese ETF UK 2021 List

You’d be wrong to think that China is dominated exclusively by state-owned enterprises. Tencent Holdings and China Yangtze Power Co are just a few examples of companies whose shares are publicly traded. While exposure to international markets, especially to the world’s second-largest economy, gives investors the benefit of diversification, it may be too time-consuming to sift through dozens of different Chinese ETFs to determine the best ones. 

We’ve done exactly that for you. 

  • 1. KraneShares MSCI China Clean Technology Index ETF 
  • 2. HSBC MSCI China UCITS ETF
  • 3. Xtrackers Harvest CSI 300 China A-Shares ETF
  • 4. iShares MSCI China ETF 
  • 5. Invesco China Technology ETF

You can invest in these top Chinese ETFs on eToro, our recommended UK ETF broker with 0% commission!

Best Chinese ETFs UK Reviewed

Now for a closer look at the best ETFs that cover Chinese companies and markets to invest in.

1. KraneShares MSCI China Clean Technology Index ETF (KGRN)

Ranked as the best Chinese ETF, KGRN has gained 71% in the last 12-months, easily dwarfing the S&P 500 ETF which is up close to 34% in this period. However, technical analysis shows that short-term sentiment on KGRN is bearish.

The daily simple and exponential moving averages are giving sell signals, while the Relative Strength Index is at 39.116. Traditionally the RSI is considered overbought when above 70 and oversold when below 30.

The KGRN stock price fell by -1.90% on 9 November 2021 from $49.54 to $48.60. The price has risen in 6 of the last 10 days and is up by 0.48% over the past 2 weeks. The year-to-date total return of the Chinese ETF is 4.65%.

An image of a year-to-date technical chart

Algorithm-based forecasting service Wallet Investor gives a positive KGRN forecast. Based on historical data, Wallet Investor sees the price going up to $61.35 by November 2022 and eventually hitting $98.24 by November 2026.

It’s worth nothing that China generates 31% of the world’s total renewable energy capacity and has allocated $360 billion to invest in this sector between 2017 and 2020. The country expects renewable energy to account for 35% of total electricity consumption by 2030.

68% of retail investor accounts lose money when trading CFDs with this provider.

2. HSBC MSCI China UCITS ETF

Technical analysis shows that short-term sentiment on HMCH is bullish. The daily simple and exponential moving averages are giving buy signals, while the Relative Strength Index is at 56.335. 

The HMCH stock price has fallen -0.997% in the last 52 weeks, while the year-to-date total return of the Chinese ETF is -15.58%. 

An image of a year-to-date technical chart

Algorithm-based forecasting service Wallet Investor gives a negative HMCH forecast. Based on historical data, Wallet Investor sees the price reaching EUR $5.85 by November 2022 and eventually hitting EUR $2.76 by November 2023.

A-Shares have outshone H-Shares over the past year and this is highlighted in the 66.5% returns of HMCT versus just 11% for the Amundi MSCI China UCITS ETF which solely offers exposure to the H-Shares market.

68% of retail investor accounts lose money when trading CFDs with this provider.

3. Xtrackers Harvest CSI 300 China A-Shares ETF

Technical analysis shows that short-term sentiment on ASHR is bearish while the Relative Strength Index is at 47.19. The daily simple and exponential moving averages are giving sell signals.

The ASHR stock price fell by -0.85% on 9 November 2021 from $38.65 to $38.32. The price has been fluctuating heavily recently and there has been a -2.54% loss for the last 2 weeks. The year-to-date total return of the Chinese ETF is -5.76%. 

An image of a year-to-date technical chart

Algorithm-based forecasting service Wallet Investor gives a negative ASHR forecast. Based on historical data, Wallet Investor sees the price going up to $18.455 by November 2022 and eventually hitting $26.263 by November 2025.

68% of retail investor accounts lose money when trading CFDs with this provider.

4. iShares MSCI China ETF 

Technical analysis provided by CoinCodex shows that short-term sentiment on MSCI is bearish, with 2 indicators displaying bullish signals compared with 21 bearish signals.

The daily simple and exponential moving averages are giving sell signals, while the Relative Strength Index is at 41.90. 

The MSCI stock price fell by -0.15% on 9 November 2021 from from $653.81 to $652.82. The price has fallen in 6 of the last 10 days, but is still up by 1.51% over the past 2 weeks. The iShares ETF is up 20% year-to-date, easily outdistancing the returns of both the Vanguard China ETF (iShares MSCI Emerging Markets ETF) which has been up about 12%, and the SPDR S&P 500 ETF, which has gained 5%. 

An image of a year-to-date technical chart

Algorithm-based forecasting service Wallet Investor gives MCHI a positive forecast. Based on historical data, Wallet Investor sees the price going up to $1658.7 by November 2022 and eventually hitting $2236.3 by November 2025.

68% of retail investor accounts lose money when trading CFDs with this provider.

5. Invesco China Technology ETF

Technical analysis shows that short-term sentiment on CQQQ is bearish, while the Relative Strength Index is at 50.347. The daily simple and exponential moving averages are giving buy signals. 

The CQQQ stock price fell by -0.20 on 9 November 2021 from from $68.88 to $68.74. The price has fallen in 6 of the last 10 days and is down by -1.53% for this period. Since 20 October 2021, the Chinese ETF has fallen by -4.96%. The year-to-date total return of the Chinese ETF is -17.28%. 

An image of a year-to-date technical chart

Algorithm-based forecasting service Wallet Investor gives CQQQ a negative forecast. Based on historical data, Wallet Investor sees the price going up to $43.514 by November 2022 and eventually hitting $19.488 by November 2023.

68% of retail investor accounts lose money when trading CFDs with this provider.

What is a Chinese ETF? 

The use of ETFs became widespread during the 2000s and has recently accelerated. ETFs combine the structure of a traditional savings vehicle – the mutual fund – with real-time pricing on stock exchanges, offering many different kinds of investors a powerful tool. They have a wide range of uses, from acting as core holdings in long-term savings plans, serving as a useful tool for making tactical asset allocation changes and permitting investors to take short-term views on market movements.

Just there are European ETFs and Russia ETFs that cover those markets, there are also ETFs that specifically allow you to gain exposure to Chinese markets.

China’s stock market has three main components: the mainland, Hong Kong and U.S-listed Chinese companies. Using exchange-traded funds (ETFs) is a convenient way to get exposure to Chinese markets as they allow one to invest in baskets of Chinese companies without having to buy stocks directly. Instead, the issuing company purchases the underlying asset (such as stocks, bonds or currency), and fund investors purchase shares in the fund. As the underlying assets rise and fall, so does the value of your fund investment.

As tradable funds, Chinese ETFs enable investors and traders to enter and exit positions at dealing prices set freely by the interaction of other market participants. There are a multitude of Chinese companies listed on Shanghai, Shenzhen, Hong Kong, London and the US stock markets and investing in a Chinese ETF gives you instant exposure to hundreds of Chinese companies.

It may come as a surprise that some of the best Chinese ETFs are not eligible to hold all investable shares. For example, the $6.1 billion iShares FTSE China 25 Index Fund, which holds 25 of the largest and most liquid Hong Kong-listed Chinese shares, is only eligible to hold H-shares and red chips.

The key to knowing which share class a fund is eligible to hold lies in knowing which index the fund tracks. 

Are Chinese ETFs a Good Investment?

Chinese equities, as measured by the MSCI China Index, have significantly underperformed the U.S stock market over the past 12 months, posting a total return of 2.4% compared to the S&P 500’s total return of 35.5%, as of 11 August 2021. The best-performing Chinese ETF for Q4 2021, based on performance over the past year, is the KraneShares MSCI China Clean Technology Index ETF.

Investing in Chinese ETFs carries risks, such as trade tensions with the U.S. For example, certain Chinese stocks were delisted by the New York Stock Exchange (NYSE) after an executive order signed by the former U.S President Donald Trump in November 2020 banned U.S investors from investing in Chinese companies with alleged ties to the Chinese military. Ongoing trade tensions between the U.S. and China continue to pose risks.

Also, despite its size and economic prowess, China’s share of global equity indices is surprisingly low. China only makes up 52% of MSCI’s All Country Equity index known as MSCI ACWI, while the US takes 58.21%. Overall, Chinese equities are widely under-represented in global indices and investment portfolios

More importantly, the bottom has fallen out for China since the government decided to target many of the country’s biggest businesses with a regulatory crackdown. For context, Alibaba, Tencent and JD.com were early recipient’s of the Chinese government’s attention and their stock prices have been plummeting ever since. 

With every investment you make, there is a risk that its value may fall. Although the growth available in China is appealing, investors should be aware of the risks and uncertainty surrounding China, including US-China tensions and environmental, social and governance concerns.

Where to Buy Chinese ETFs

You don’t have to search far and wide to invest in the best Chinese ETFs, there are dozens of brokers that can enable you to do this. 

ETFs trade like individual stocks, so many of the features sought by investors in a share dealing account are also relevant to ETF investors. Fortunately, brokers like eToro offer ETFs commission-free. Besides commissions, it’s also important to consider other criteria including a broker’s fund selection and tools for creating a well-diversified portfolio. 

Here are our picks for best online ETF brokers for every kind of Chinese ETF investor, whether you’re looking for a broker with free commissions, the broadest range of ETFs or the best platform to help you build and manage a portfolio. 

1. eToro – Invest in ETFs While Paying Zero Commission 

eToroeToro is a well-known fintech company and a social trading broker, established in 2007. eToro serves UK clients through a unit regulated by the Financial Conduct Authority (FCA) and Australians through an Australian Securities and Investment Commission (ASIC) regulated entity. All other customers are served by a Cypriot unit that is regulated by the Cyprus Securities and Exchange Commission (CySEC).

eToro has more than 17 million users in approximately 100 countries and is considered safe because its UK and Australian arms are regulated by top-tier financial authorities. Impressively, the company supports more than 2,400 stocks from 17 markets. 

Best High yield ETFs UK on eToro

You can invest in the best Chinese ETFs through eToro without paying any commission. This means that the only fee that needs to be taken into account is the expense ratio charged by the ETF provider. This will be passed on to you and subsequently reflected in your eToro account.

eToro has a minimum ETF investment of just $50. This means that you can buy the best Chinese ETFs UK with a small amount of capital. Once you have completed your investment, you can check the value of your Chinese ETF 24/7 via your eToro portfolio. Any time you wish to cash out your Chinese ETF you can do so at the click of a button – as long as the respective market is open.

Pros

  • Buy ETFs with 0% commission Low minimum to fund an account and begin investing 
  • 150+ ETFs
  • Social trading: Ability to match moves of popular traders using CopyTrader technology
  • One of the most user-friendly online trading platforms in the business
  • 2,400+ stocks listed on the UK and international markets
  • FCA and FSCS protections
  • Deposit funds with a debit/credit card, e-wallet, or UK bank account
  • Unlimited demo account offered
  • Free access to TipRanks expert stock analysis

Cons

  • No ISAs or SIPPs

68% of retail investor accounts lose money when trading CFDs with this provider.

2. Capital.com – A Global and Trustworthy CFD Broker for ETF Trading

capital.com7Capital.com is a CFD trading platform that leverages technology to deliver a high-quality  user experience. It was founded in 2016 and has upwards of 1,000,000 clients.

Operating in over 50 countries, capital.com’s proprietary trading platform is fairly unique and provides useful information designed to help traders make sound investment decisions. Capital.com has low forex CFD fees and commission-free real stocks are available for customers under FCA or CySEC (typically UK and EU clients). 

Capital.com ETFs

The account opening process is easy and user-friendly. Capital.com offers traders and investors advanced features such as Advanced AI technology which can help you refine your approach to ETFs trading. Also, when choosing to trade ETFs with CFDs, you do not buy the underlying asset itself, meaning you are not tied to it. You only speculate on the rise or fall of its price. CFD trading is no different from traditional trading in terms of its associated strategies. A CFD investor can go short or long, set stop and limit orders, and apply trading scenarios that align with his or her objectives.

Finally, Captal.com puts a special emphasis on safety. Licensed by the FCA, CySEC and NBRB, it complies with all regulations and ensures that its clients’ data security comes first. The company allows traders to withdraw money 24/7 and keeps traders’ funds across segregated bank accounts. 

Pros:

  • Low forex CFD feeds and commission-free real stocks
  • Great account opening experience
  • Educational app for new traders
  • £20 minimum deposit
  • Tight spreads
  • Leverage offered
  • Excellent email and chat support 

Cons:

  • Only CFD and real stocks available

75.26% of retail investor accounts lose money when trading CFDs with this provider.

How to Invest in a Chinese ETF

Since we’ve already discussed how to access the best Chinese ETF in the UK, it’s time to move on to another important step, which also happens to be the final part of this guide – a detailed walk through of how to get started with the commission-free broker eToro. 

Step 1: Open an Account and Upload ID

You will first need to visit the eToro website and open an account.

A screenshot of how to open an account on the eToro website

This is standard practice for all FCA-regulated brokers and simply requires some personal information from you.

Step 2: Confirm Identity

You will also need to upload a copy of your passport or driver’s license. To verify your home address, eToro requires a recently issued bank account statement or utility bill.

If you want to upload these documents at a later date – you can. However, this needs to be done before you can make a withdrawal or deposit of more than $2,250.

Step 3: Make a Deposit

Before you can invest in a Chinese ETF through eToro – you’ll need to make a deposit.

You can choose from the following payment methods:

  • Debit/Credit Card (Visa, MasterCard, Maestro)
  • Paypal
  • Skrill
  • Neteller
  • UK Bank Transfer

Step 4: Search for ETF

If you already know which ETF interests you – it’s easy to search for it.  In our example, we are searching for ‘China’.

A screenshot of how to search for Chinese ETFs on the eToro website

Step 5: Place a Chinese ETF Order

Now you need to place an order on your chosen Chinese ETF. As you can see from the example below – all you need to do is enter your stake. The minimum is $50 – so you can enter any amount as long as it meets this figure.

Finally, click on the ‘Open Trade’ button to complete your commission-free Chinese ETF investment.

Conclusion

By investing in a Chinese ETF, you can not only increase your exposure to the Chinese markets but also enjoy the key benefits of their fund structure: transparency, liquidity and low cost. In general, fees for ETFs can be lower than the annual management charges levied by traditional investment vehicles, making them a popular choice in an age of cost-consciousness and low returns. 

The variety of choices for Chinese ETFs makes distinguishing the best from the rest a little daunting, which is why we’ve used a methodology that takes into account many of the factors that should be considered when helping to identify the best of the best for your portfolio.

eToro – Bu Chinese ETFs with 0% Commission

eToro

68% of retail investor accounts lose money when trading CFDs with this provider.

Frequently Asked Questions on Chinese ETFs

What is a good Chinese ETF?

What is the largest Chinese ETF?

How do I invest in a Chinese ETF?

About Alan Draper PRO INVESTOR

Alan is the Chief Editor of the Buyshares sites and is responsible for ensuring all the content on our site is accurate, relevant and helpful. He is an experienced editor who has worked for several leading online publications. Alan is also a writer and is an expert on the stock market.

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