Recommend a China-focused, risk-seeking fund

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jajlrajrf
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Recommend a China-focused, risk-seeking fund

Post by jajlrajrf » Sat May 23, 2020 6:35 pm

I'm looking for an ETF or mutual fund that is focused firmly on smaller, earlier-stage Chinese firms and carries above-average risk. It's pretty easy to find broad-based Asia/Pacific funds that are focused on their equivalent of the S&P 500 (eg large banks), but I'm looking for something more aggressive and risk-seeking for part of my portfolio. Anyone have any specific recommendations here?

(If your recommendation is "Don't do it, I don't like this idea": Please start a separate thread instead of using this one for that discussion.)

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anon_investor
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Re: Recommend a China-focused, risk-seeking fund

Post by anon_investor » Sat May 23, 2020 6:49 pm

No idea if this ETF is good but:
ECNS (iShares MSCI China Small-Cap ETF)

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Re: Recommend a China-focused, risk-seeking fund

Post by dru808 » Sat May 23, 2020 6:50 pm

There was one brought up a couple time’s recently ,(Thomas china fund)?, don’t remember, it has done quite well compared to a broad China index. I’m sure someone will chime in about it.

Edit: Matthews China fund. I believe this is the fund I’m thinking about https://us.matthewsasia.com/our-funds/f ... verview.fs

Maybe it was this one https://us.matthewsasia.com/our-funds/f ... verview.fs
60% US equity | 25% International equity | 15% US Treasury bonds

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Re: Recommend a China-focused, risk-seeking fund

Post by petulant » Sat May 23, 2020 7:40 pm

In the same vein, could somebody recommend an oil and gas fund with above average risk? Plenty of existing funds have Exxon and Chevron, but I'm looking for a fund that invests in mavericks like Chesapeake and SandRidge.

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jajlrajrf
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Re: Recommend a China-focused, risk-seeking fund

Post by jajlrajrf » Sat May 23, 2020 8:17 pm

petulant wrote:
Sat May 23, 2020 7:40 pm
In the same vein, could somebody recommend an oil and gas fund with above average risk? Plenty of existing funds have Exxon and Chevron, but I'm looking for a fund that invests in mavericks like Chesapeake and SandRidge.
That sounds like a great topic...for another thread. Please start it and leave this one for the China-focused ETFs, please. Thanks!

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jajlrajrf
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Re: Recommend a China-focused, risk-seeking fund

Post by jajlrajrf » Sat May 23, 2020 8:18 pm

dru808 wrote:
Sat May 23, 2020 6:50 pm
There was one brought up a couple time’s recently ,(Thomas china fund)?, don’t remember, it has done quite well compared to a broad China index. I’m sure someone will chime in about it.

Edit: Matthews China fund. I believe this is the fund I’m thinking about https://us.matthewsasia.com/our-funds/f ... verview.fs

Maybe it was this one https://us.matthewsasia.com/our-funds/f ... verview.fs
This is interesting, and yeah something that is more focused than the MSCI index is exactly what I'm looking for. Will investigate it a bit more closely but it seems like a good starting point.

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Re: Recommend a China-focused, risk-seeking fund

Post by grabiner » Sat May 23, 2020 10:14 pm

Besides just China, there are small-cap emerging markets ETFs, which hold a lot of Chinese stock. There are cap-weighted SPDR Emerging Markets Small-Cap (EWX) and iShares Emerging Markets Small-Cap (EEMS), and dividend-weighted WisdomTree Emerging Markets Small-Cap Dividend (DGS).

I used to hold EWX and later EEMS for diversification, but gave up because they are too expensive, EWX was tax-inefficient, and EEMS was too expensive to trade.
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Re: Recommend a China-focused, risk-seeking fund

Post by jajlrajrf » Sat May 23, 2020 11:06 pm

Really like both of those suggestions, thanks!

And yeah, one of the drawbacks of any exotic ETF is that the more specialized the idea behind it is, the more likely that fees will be higher. It can be tough to decide whether it's "worth it".

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Re: Recommend a China-focused, risk-seeking fund

Post by HomerJ » Sat May 23, 2020 11:15 pm

I'd like to flush my money down the toilet... Which brand of toilet should I use? Please don't respond if you think that's a bad idea... k.. thx

:D

(Sorry OP, couldn't help it).

Why don't you want to discuss the merits of your idea? Is it not strong enough to stand up to scrutiny?

How much of your portfolio do you want to dedicate to a high-risk, China-focused fund? Why do you think a China-focused fund is likely to out-perform other funds?
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”

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Re: Recommend a China-focused, risk-seeking fund

Post by theorist » Sat May 23, 2020 11:20 pm

You might also consider the Matthews Asia Innovators Fund:

https://www.morningstar.com/funds/xnas/matfx/quote

It has 53.28% of its holdings in China, according to Fidelity. It has been an excellent performer, though who knows what happens, going forward.

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Re: Recommend a China-focused, risk-seeking fund

Post by jajlrajrf » Sat May 23, 2020 11:25 pm

HomerJ wrote:
Sat May 23, 2020 11:15 pm
Why don't you want to discuss the merits of your idea?
I'm simply not interested in your opinion about whether this is a good idea. But, if that's a topic that interests you, I absolutely encourage you to have that discussion on some other thread.

As I said in the first post, my intent for this thread is to gather suggestions for potential mutual fund or ETF investments that implement this idea - thanks to everyone that is coming up with suggestions, there have already been a few that I hadn't heard of!

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jajlrajrf
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Re: Recommend a China-focused, risk-seeking fund

Post by jajlrajrf » Sat May 23, 2020 11:31 pm

Oh, and I should have had this in the first post - my sort of starting point of "Welp, not sure if there's a better way to implement this" would be an ETF along the lines of Xtrackers Harvest CSI 300 China A-Shares ETF (ASHR), which is essentially something akin to "The S&P 500, but for the Shanghai index." (although of course the companies in ASHR aren't anywhere near the stability and size of S&P500 companies; it's a loose metaphor). That's still a bit focused on the heavy hitters, hence my question about whether there are other options that take a different tack.

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Re: Recommend a China-focused, risk-seeking fund

Post by petulant » Sun May 24, 2020 10:10 am

jajlrajrf wrote:
Sat May 23, 2020 8:17 pm
petulant wrote:
Sat May 23, 2020 7:40 pm
In the same vein, could somebody recommend an oil and gas fund with above average risk? Plenty of existing funds have Exxon and Chevron, but I'm looking for a fund that invests in mavericks like Chesapeake and SandRidge.
That sounds like a great topic...for another thread. Please start it and leave this one for the China-focused ETFs, please. Thanks!
Maybe you don't follow the news. SandRidge is on the cusp of a second bankruptcy, and Chesapeake is about to go bust. It's a joke about taking significant risk for very little expected reward. See the news about Luckin Coffee. This isn't is a good idea.

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Re: Recommend a China-focused, risk-seeking fund

Post by jajlrajrf » Sun May 24, 2020 11:51 am

petulant wrote:
Sun May 24, 2020 10:10 am
Maybe you don't follow the news. SandRidge is on the cusp of a second bankruptcy, and Chesapeake is about to go bust. It's a joke about taking significant risk for very little expected reward. See the news about Luckin Coffee. This isn't is a good idea.
I understood exactly what you were getting at, but apparently you didn't see either of the places where I politely asked that the topic you want to raise be discussed on a different thread. So I'll ask you a third time: I understand that you have very valuable and important opinions on why you don't think this idea is good. Please take those to a different thread, because I'd rather this thread wasn't full of arguing about whether it's a good idea. I want this thread as a catalogue of investment ideas for those of us who think it is a good idea.

Thanks so much in advance for respecting this request!

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Re: Recommend a China-focused, risk-seeking fund

Post by petulant » Sun May 24, 2020 11:55 am

jajlrajrf wrote:
Sun May 24, 2020 11:51 am
petulant wrote:
Sun May 24, 2020 10:10 am
Maybe you don't follow the news. SandRidge is on the cusp of a second bankruptcy, and Chesapeake is about to go bust. It's a joke about taking significant risk for very little expected reward. See the news about Luckin Coffee. This isn't is a good idea.
I understood exactly what you were getting at, but apparently you didn't see either of the places where I politely asked that the topic you want to raise be discussed on a different thread. So I'll ask you a third time: I understand that you have very valuable and important opinions on why you don't think this idea is good. Please take those to a different thread, because I'd rather this thread wasn't full of arguing about whether it's a good idea. I want this thread as a catalogue of investment ideas for those of us who think it is a good idea.

Thanks so much in advance for respecting this request!
Since there are many readers other than you, it was an important point to make a public record that it's a very risky idea, laughably so.

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Re: Recommend a China-focused, risk-seeking fund

Post by jajlrajrf » Sun May 24, 2020 12:10 pm

Hadn't seen this one before:

VanEck Vectors ChinaAMC SME-ChiNext ETF (CNXT)

"CNXT tracks a cap-weighted index of 100 small- and medium-size companies traded on the SME Board and ChiNext Board of the Shenzhen Stock Exchange"

Interesting because it's giving you exposure to a non-Shanghai stock exchange. Historically, it's had a great 1-year return (even taking into account the covid-19 drop - 27.7%), much more negative story over the longer term. Top sectors held are IT, hospitals, and industrials. Net expense ratio is 0.65%, which is high compared to the simple indices we know and love, but comparable to most emerging markets ETFs.

Not sure it's for me, but might be for someone who wants to place a bet on "Return to normal Shenzhen international-facing manufacturing activity."

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Re: Recommend a China-focused, risk-seeking fund

Post by jajlrajrf » Sun May 24, 2020 12:16 pm

Now this one is more the sort of play I'm looking for:

MSCI China Consumer Discretionary ETF (CHIQ) - https://www.globalxetfs.com/funds/chiq/

"The Global X MSCI China Consumer Discretionary ETF (CHIQ) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI China Consumer Discretionary 10/50 Index."

This is a bet on internal Chinese consumer spending, which means you're not implicitly limited to companies large enough to have an international presence (although you'll undoubtedly get some of those too, e.g. Alibaba, given Chinese consumer spending habits.) Expense ratio is 0.65%.

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Re: Recommend a China-focused, risk-seeking fund

Post by stan1 » Sun May 24, 2020 12:27 pm

It's Emerging Markets not just China but if I wanted EM Value/Yield I'd think about Meb Faber/Cambria's EYLD

In reality most emerging market products are actually two China investments (most are around 50% two China and EYLD is too)

He tries to avoid state owned enterprises.

ER is 0.66% which could be worse for an active EM value strategy.

(Please treat this as a data point not an endorsement, plus I enjoy listening to some of Meb's podcasts)

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jajlrajrf
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Re: Recommend a China-focused, risk-seeking fund

Post by jajlrajrf » Sun May 24, 2020 8:17 pm

Thanks for the suggestions, stan1! Worth noting that EYLD's two big China holdings are in Taiwan and Hong Kong, respectively.

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Re: Recommend a China-focused, risk-seeking fund

Post by jajlrajrf » Thu May 28, 2020 12:44 pm

I've taken a small position in CHIQ based on the suggestions in this thread. Thanks, everyone!

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Re: Recommend a China-focused, risk-seeking fund

Post by GreenLantern2814 » Thu May 28, 2020 10:37 pm

+1 to all the Matthews suggestions here.

They have a solid set of Asia-specific funds, and are generally well respected based on my research. I've held a few for a few years now.

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Re: Recommend a China-focused, risk-seeking fund

Post by HomerJ » Fri May 29, 2020 9:42 am

jajlrajrf wrote:
Thu May 28, 2020 12:44 pm
I've taken a small position in CHIQ based on the suggestions in this thread. Thanks, everyone!
The only person who mentioned or suggested CHIQ in this thread was you.

The ten-year return of CHIQ is 4%. Not 4% a year, just 4% gain over 10 years.

$10,000 invested in CHIQ in 2010 is worth $10,400 today.

But maybe they are due for some big gains... Good luck to you!
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”

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Re: Recommend a China-focused, risk-seeking fund

Post by HEDGEFUNDIE » Fri May 29, 2020 9:44 am

HomerJ wrote:
Fri May 29, 2020 9:42 am
jajlrajrf wrote:
Thu May 28, 2020 12:44 pm
I've taken a small position in CHIQ based on the suggestions in this thread. Thanks, everyone!
The only person who mentioned or suggested CHIQ in this thread was you.
Lol. I guess the thread title was intended to be a statement not a question 😂

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Re: Recommend a China-focused, risk-seeking fund

Post by jajlrajrf » Fri May 29, 2020 8:00 pm

HEDGEFUNDIGE[/quote wrote:Lol. I guess the thread title was intended to be a statement not a question
Nah, the suggestions in the thread actually helped me crystallize my thinking on what sectors I'm interested in, so it was legit helpful.
Last edited by jajlrajrf on Fri May 29, 2020 8:01 pm, edited 1 time in total.

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Re: Recommend a China-focused, risk-seeking fund

Post by jajlrajrf » Fri May 29, 2020 8:00 pm

HomerJ wrote:But maybe they are due for some big gains... Good luck to you!
Thanks, man! I appreciate it!

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Re: Recommend a China-focused, risk-seeking fund

Post by Picasso » Sat May 30, 2020 7:18 am

jajlrajrf wrote:
Fri May 29, 2020 8:00 pm
HEDGEFUNDIGE[/quote wrote:Lol. I guess the thread title was intended to be a statement not a question
Nah, the suggestions in the thread actually helped me crystallize my thinking on what sectors I'm interested in, so it was legit helpful.
Which fund(s) did you decide to invest in and why? I’m curious.

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Re: Recommend a China-focused, risk-seeking fund

Post by jajlrajrf » Sat May 30, 2020 11:25 am

Picasso wrote:
Sat May 30, 2020 7:18 am
Which fund(s) did you decide to invest in and why? I’m curious.
Well, I already have some emerging markets debt and emerging markets equity fund exposure, so I already have some China exposure through that. I ended up going with CHIQ because my central thesis is basically that most of our American investment in China is targeting their industrial output, but Chinese consumer spending is near an inflection point and I expect it to be growing massively in the next 10 years. I don't have enough China knowledge to pick winning stocks (and that's against my nature even in the US market), so I wanted an ETF that is narrow enough ("Chinese domestic consumer spending") to target the sector I want, but broad enough to absorb some of the likely volatility, risk, or outright fraud which one would expect to occur in an emerging market. So CHIQ is my first position, but I'm certainly keeping my ears open for other ETFs that are similarly targeting the consumer space, and if I found one that targeted better would consider taking a position or moving from CHIQ if it looked better on some axis.

I've been pretty amused, if I'm honest, by the deeply emotional reactions I've seen to this thread! I assume that at least some of that is motivated by politics. There are no guarantees in investing, and certainly there are risks to my thesis:

• Maybe the most populous country in the world will not experience growth in consumer spending.
• Maybe it will experience growth but an American-run ETF is a bad way to invest in it.
• Maybe it will experience growth, and an ETF is a fine way to invest in it, but the growth will be offset by fraud, corruption, political mandates, etc.

But the one reaction I definitely did not expect is, paraphrased, was "Why in the world would you think that a rapidly expanding superpower is a good place to invest money?" I guess we'll see.

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Re: Recommend a China-focused, risk-seeking fund

Post by HomerJ » Sat May 30, 2020 4:06 pm

jajlrajrf wrote:
Sat May 30, 2020 11:25 am
But the one reaction I definitely did not expect is, paraphrased, was "Why in the world would you think that a rapidly expanding superpower is a good place to invest money?" I guess we'll see.
Was China rapidly expanding from 2010-2020?

It should give you some concern that the fund you picked has never made much money since inception.

(My guess for the reason is #3 on your list - Maybe it will experience growth, and an ETF is a fine way to invest in it, but the growth will be offset by fraud, corruption, political mandates, etc.)
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”

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Re: Recommend a China-focused, risk-seeking fund

Post by reln » Sat May 30, 2020 4:29 pm

jajlrajrf wrote:
Sat May 23, 2020 6:35 pm
I'm looking for an ETF or mutual fund that is focused firmly on smaller, earlier-stage Chinese firms and carries above-average risk. It's pretty easy to find broad-based Asia/Pacific funds that are focused on their equivalent of the S&P 500 (eg large banks), but I'm looking for something more aggressive and risk-seeking for part of my portfolio. Anyone have any specific recommendations here?

(If your recommendation is "Don't do it, I don't like this idea": Please start a separate thread instead of using this one for that discussion.)
https://money.usnews.com/funds/etfs/ran ... ina-region

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jajlrajrf
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Re: Recommend a China-focused, risk-seeking fund

Post by jajlrajrf » Sat May 30, 2020 6:14 pm

Some nice suggestions there. Global X MSCI China Consumer Stpls ETF is also sort of in the wheelhouse.

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Re: Recommend a China-focused, risk-seeking fund

Post by GreenLantern2814 » Sat May 30, 2020 7:41 pm

Another +1 to Matthews Funds offerings.

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Re: Recommend a China-focused, risk-seeking fund

Post by Stick5vw » Sun May 31, 2020 9:50 am

Matthews is a solid shop although have seen a lot of outflows and underperformance lately.

BlackRock also offers a very compelling quant China A share strategy with strong track record.

I’ve debated taking some concentrated China views for a while. (Though equally working for 5 years in China was a rather concentrated bet in and of itself!)

My thinking was to have a EM + China overweight - but haven’t pulled the trigger as the volatility of China positions are high and frankly historical performance (for whatever that is worth) isn’t great.

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