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Investment expert Doug Fabian brings to your attention a fund that gives you exposure the top 50 China's companies, the fastest growing emerging market country.

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Accessing China??s Top 50 Companies

Investment expert Doug Fabian brings to your attention a fund that gives you exposure the top 50 China’s companies, the fastest growing emerging market country.

This week??s ETF Talk covers iShares China Large-Cap ETF (FXI), an exchange-traded fund (ETF) that focuses exclusively on large companies in China — a quickly rising emerging market country with a gross domestic product (GDP) growing at an annual rate of 9-10% for the last decade.

Since its inception in October 2004, FXI has delivered an annual average return of 11.4%. The fund invests at least 90% of its $3.66 billion in assets in the 50 largest and most liquid Chinese companies whose stocks are actively trading on the Hong Kong Stock Exchange.

This means that U.S.-listed Chinese mega-caps, such as Baidu, Inc., are not included in the fund. FXI is very liquid and has high daily volume. Even so, the fund??s expense ratio of 0.73% is a bit high when compared with its peers.

As far as the fund??s holdings, it carries a heavy focus on China??s financial sector, with 49.1% of its assets invested in the country’s big, state-owned banks. Other sectors the fund concentrates on include communication services, 11%, and technology, 8.5%, which are amongst the fastest-growing sectors in China. The rest of the holdings of FXI are in other sectors, including basic materials, real estate and industrials.

The fund is non-diversified. By investing exclusively in large caps that are either under government control or are of vital importance to China??s economy, however, FXI manages to sidestep much of the downside risk that small- and medium-sized companies are prone to incur. What FXI is possibly most vulnerable to are the concerns that China??s growth may be slowing.

To read the rest of the article, click here.

Written By

Doug Fabian is the editor of Successful Investing and High Monthly Income, and is the host of the syndicated radio show, "Doug Fabian's Wealth Strategies." Taking over the reigns from his dad, Dick Fabian, back in 1992, Doug has continued to uphold the reputation of the newsletter as the #1 risk-adjusted market timer as ranked by Hulbert??s Investment Digest. For more than 30 years, Successful Investing (formerly the Telephone Switch Newsletter) has produced double-digit annual gains. Doug has become known for his expert knowledge and timely use of innovative tools like Exchange Traded Funds, bear funds and Enhanced Index funds to profit in any market climate.

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Accessing China’s Top 50 Companies

This week’s ETF Talk covers iShares China Large-Cap ETF (FXI), an exchange-traded fund (ETF) that focuses exclusively on large companies in China — a quickly rising emerging market country with a gross domestic product (GDP) growing at an annual rate of 9-10% for the last decade.

Since its inception in October 2004, FXI has delivered an annual average return of 11.4%. The fund invests at least 90% of its $3.66 billion in assets in the 50 largest and most liquid Chinese companies whose stocks are actively trading on the Hong Kong Stock Exchange.

This means that U.S.-listed Chinese mega-caps, such as Baidu, Inc., are not included in the fund. FXI is very liquid and has high daily volume. Even so, the fund’s expense ratio of 0.73% is a bit high when compared with its peers.

As far as the fund’s holdings, it carries a heavy focus on China’s financial sector, with 49.1% of its assets invested in the country’s big, state-owned banks. Other sectors the fund concentrates on include communication services, 11%, and technology, 8.5%, which are amongst the fastest-growing sectors in China. The rest of the holdings of FXI are in other sectors, including basic materials, real estate and industrials.

The fund is non-diversified. By investing exclusively in large caps that are either under government control or are of vital importance to China’s economy, however, FXI manages to sidestep much of the downside risk that small- and medium-sized companies are prone to incur. What FXI is possibly most vulnerable to are the concerns that China’s growth may be slowing.

To read the rest of the article, click here.

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