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Chinavestor ETF Spotlight: SPDR S&P China ETF

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light_2 November 19, 2010 (Chinavestor) With all the news of inflation rising in China and new headlines regarding Beijing's order to Chinese banks that they increase reserve ratios for the fifth time in 2010, being long China-specific ETFs may not be on the minds of many investors. That's not an unwarranted way to view the current state of affairs in the market, but it pays to remember that the object of investing is to buy at favorable prices and sell at even more favorable terms, so why not take a look at some China-specific ETFs that have suffered recent haircuts.

One such example is the SPDR S&P China ETF (NYSE:GXC), a large-cap focused fund in much the same herd as the iShares/FTSE Xinhua China 25 Index (NYSE:FXI). Earlier this month, the the SPDR S&P China ETF (NYSE:GXC) was trading for around $85. It now resides below $80.

SPDR Index Shares Funds: SPDR S&P China ETF (GXC) Nov. 15-19, 2010

GXC_20101119

Source: Reuters.com

Like the iShares/FTSE Xinhua China 25 Index (NYSE:FXI), the SPDR S&P China ETF (NYSE:GXC) is heavy on Chinese banks with over a third of its allocation going to that sector. That could mean even better prices could be had on the ETF in the near-term. Overall sector diversity is pretty good as energy, industrial and information technology names all get double-digit weights in addition to financials.

The SPDR S&P China ETF's (NYSE:GXC) include several Chinese large-cap ADRs that U.S. investors are probably very familiar with including, PetroChina (NYSE:PTR), China's largest oil company, Cnooc (NYSE:CEO), China's largest offshore oil driller, Baidu (Nasdaq:BIDU), China's largest Internet search service, and China Life Insurance (NYSE:LFC), the world's largest life insurance provider.

While the percentage that these holdings account for differ between the two ETFs, SPDR S&P China ETF's (NYSE:GXC) top-10 roster does mirror that of the iShares/FTSE Xinhua China 25 Index (NYSE:FXI), though Baidu (Nasdaq:BIDU) is not found among the latter's top-10 lineup.

Something else for longer-term investors to take note of: While the iShares/FTSE Xinhua China 25 Index (NYSE:FXI) is by more the more liquid ETF of this pair and has assets under management that are more than 10 times those of the SPDR S&P China ETF's (NYSE:GXC) there is a big difference in expense ratios. FXI comes in at 0.73% while GXC checks in at 0.59%. Something to consider if you expect to be owning one of these ETFs for multiple months or longer.



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