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Chinavestor ETF Spotlight: Global X China Consumer ETF

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money8 November 12, 2010 (Chinavestor) A large part of the China growth story is the Chinese consumer and that makes sense. As wealth continues its rapid expansion in the world's fastest growing major economy, more Chinese join a growing middle class and more Chinese depart the middle class to become truly wealthy. Either way, the consumer is an intergral part of China's domestic growth going forward.

Plenty of U.S. multinational companies have tapped into this trend as famous brands such as Coach (NYSE:COH), McDonald's (NYSE:MCD) and Tiffany (NYSE:TIF) now depend on China for a substantial chunk of their revenue. But what about tapping into the Chinese consumer in more direct fashion? Enter the Global X China Consumer ETF (NYSE:CHIQ), one of six China-specific ETFs tracking individual sectors introduced by Global X in the past year.

Home to 40 stocks, the Global X China Consumer ETF (NYSE:CHIQ) isn't even a year old, but has already attracted more than $172 million in assets under management, a robust haul when considering most new ETFs are judged to be successful if they can land $50 million in assets in their first year of trading. The Global X China Consumer ETF (NYSE:CHIQ) tracks the Solactive China Consumer Index, which only includes stocks that are accessible to foreign investors.

Proving that the Global X China Consumer ETF (NYSE:CHIQ) is perhaps the best way for foreign investors to get exposure to the Chinese consumer, retail and food stocks account for 53% of the ETF's weight. That's a positive trait, but the good news doesn't end there. China has become the largest auto market in the world and the Global X China Consumer ETF (NYSE:CHIQ) also represents an avenue to tap into that trend as auto-related names account for almost 15% of the ETF's sector allocation.

The Global X China Consumer ETF (NYSE:CHIQ) does a fair job of mixing China-listed stocks with American depositary receipts and some of the ETFs ADRs that U.S. investors might be familiar with include AirMedia Group (Nasdaq:AMCN), China Southern Airlines (NYSE:ZNH), Home Inns & Hotels Management (Nasdaq:HMIN), New Oriental Education (NYSE: EDU) and Zhongpin (NYSE:HOGS).

Over the past three months, the Global X China Consumer ETF (NYSE:CHIQ) has lagged the performance of the Guggenheim China Small Cap ETF (NYSE:HAO), but outperformed the PowerShares Golden Dragon Halter USX China ETF (NYSE:PGJ) by a small margin and sharply outpaced the iShares/FTSE Xinhua China 25 Index (NYSE:FXI).

Of course, past performance is no guarantee of future returns, but the power of the Chinese consumer does bode well for the future prospects of the Global X China Consumer ETF (NYSE:CHIQ).



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