China Map on Globe

China vs. Emerging Markets | 2 August 2020

In this novel environment, advisors are not only thirsting for new ideas, but re-calibrating their fundamentals. They’re also learning who their clients are when faced with volatility. 

Souring relations between the United States and China, punctuated with bitter consulate closures, has thrust market sentiment downwards. Investors believe this phenomenon benefits emerging markets and China—China funds have enjoyed three exceptional weeks of asset flows fueled by strong interest in emerging market funds. How can we capitalize on these trends?

iShare’s FXI is a popular option, but we’ve found several alternatives that potentially improve on return, risk, investment costs, and use of capital. Despite a market cap just 33% of FXI’s, the Asia-focused AIA leads the pack.

Advisor-favorite and category-leader MCHI may not be the strongest option for China exposure. All-Asia fund AAXJ boasts a Replacement Quality Score of 90, while China-only choice CHN also offers superior efficiency. 

State Street’s GXC is among the rare funds that hold all Chinese shares across all market cap sizes. Nonetheless, our platform reviewed over 4,100 fund strategy scenarios to come up with MCHI and GMF as alternatives. These funds earned Replacement Scores of 93 and 90 by potentially improving risk and expense along with lowering use of capital.

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Have a great week!

Best,

John DiBenedetto and the Portformer Team

John DiBenedetto

Sales | Business Development | Customer Success

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