Launched in October 2004, the iShares FTSE China 25 exchange traded fund (ETF) aims to track the performance of the FTSE China 25 Index as closely as possible. Despite its name, the index is made up of the 25 largest and most liquid 'red-chips' and 'H-shares' listed in Hong Kong, not mainland China. The index is free-float market capitalisation weighted.
Like most ETFs offered by iShares, the fund invests in physical index securities, giving the investor access to cost-efficient, liquid vehicles that trade on stock exchanges.
The fund is a much cheaper alternative to open-ended vehicles offering pure-play exposure to China - its total expense ratio (TER) is a very reasonable 0.74 per cent, around half the amount levied by most open-ended funds.
It's also a very concentrated way to tap into the Chinese market - only 25 holdings, and around three-quarters of those concentrated in the financial and telecommunication sector. But it has held up well over the long term, posting a return of almost 25 per cent over three years.
It has done a good job of tracking its benchmark index over shorter timeframes, although over three years the tracking error is quite wide at -3.61 per cent.
The fund pays out dividends on a quarterly basis and currently has a distribution yield of 1.82 per cent. It can be held within an individual savings account (Isa) and/or a self-invested personal pension (Sipp) and benefits from having both UK distribution and reporting status, so profits are taxed as capital gains, not income.
|iSHARES FTSE CHINA 25 (FXC)|
|SIZE OF FUND||$1,017.92m||1-YEAR PERFORMANCE||-12.98%|
|LAUNCH DATE||21 October 2004||3-YEAR PERFORMANCE||24.99%|
|INDEX||FTSE CHINA 25 Index||TOTAL EXPENSE RATIO||0.74%|
|BASE CURRENCY||USD||MORE DETAILS||uk.ishare.com|
Performance figures as at 23 April 2012)
Top ten holdings (as at 20 April 2012)
|China Construction Bank-||8.81|
|Industrial & Comm Bank of China||8.07|
|Bank of China||6.09|
|Ping An Insurance Group Co||4.13|
|China Life Insurance Co||4.12|
|China Merchants Bank||4.05|
|China Shenhua Energy Co||4.04|
|Oil & gas||14.51|