Best China ETFs to Watch in 2025

Below, we’ll examine a selection of popular and well-regarded China ETFs, highlighting their key characteristics to help you make informed investment decisions. We will consider factors such as expense ratios, top holdings, and reasons to consider each ETF.

• Expense Ratio: 0.58%
• Top Holdings: Tencent Holdings Ltd., Alibaba Group Holding Ltd., Meituan, PDD Holdings Inc ADR, China Construction Bank Corp.
• Why Consider It? MCHI offers broad exposure to large and mid-cap Chinese stocks, tracking the MSCI China Index. It includes various share classes (like H-shares, B-shares, Red chips, P chips, and some A-shares via Stock Connect), providing comprehensive coverage of the investable Chinese equity market accessible to international investors. It’s often considered a core holding for diversified China exposure.

• Expense Ratio: 0.59%
• Top Holdings: Tencent Holdings Ltd., Alibaba Group Holding Ltd., Meituan, China Construction Bank Corp H, PDD Holdings Inc ADR.
• Why Consider It? Similar to MCHI, GXC provides broad exposure to Chinese equities, but it tracks the S&P China BMI Index. While covering many of the same large companies, its index methodology and weighting might differ slightly from MSCI’s, potentially leading to variations in sector exposure and performance. It serves as another strong option for diversified, large- and mid-cap China exposure.

• Expense Ratio: 0.65%
• Top Holdings: Kweichow Moutai Co Ltd A, Contemporary Amperex Technology Co Ltd A, Ping An Insurance Group Co of China Ltd A, China Merchants Bank Co Ltd A, Midea Group Co Ltd.
• Why Consider It? ASHR is distinct because it specifically targets China A-shares – stocks listed on the mainland Shanghai and Shenzhen stock exchanges, primarily traded in Renminbi. This provides direct exposure to companies more focused on the domestic Chinese economy. It tracks the CSI 300 Index, a benchmark for mainland Chinese stocks, offering a different portfolio composition compared to MCHI or GXC.

• Expense Ratio: 0.25%
• Top Holdings: PDD Holdings Inc ADR, Li Auto Inc ADR, Full Truck Alliance Co Ltd ADR, Trip.com Group Ltd ADR, KE Holdings Inc ADR
• Why Consider It? GLCN tracks the MarketGrader China Growth Leaders Index, which selects companies based on growth and profitability metrics. This ETF aims to capture companies demonstrating strong growth potential within the Chinese market, often leading to a higher concentration in sectors like technology and consumer discretionary compared to broader market ETFs.

• Expense Ratio: 0.12%
• Top Holdings: PDD Holdings Inc ADR, Trip.com Group Ltd ADR, JD.com Inc ADR, NetEase Inc ADR, Baidu Inc ADR
• Why Consider It? PGJ focuses on companies included in the Nasdaq Golden Dragon China Index, which primarily consists of U.S.-listed companies headquartered or incorporated in mainland China, Hong Kong, or Macau. This often results in heavy exposure to Chinese technology and internet companies whose ADRs trade on U.S. exchanges. It can be highly volatile due to its concentration and sensitivity to US-China relations and specific regulatory concerns affecting these listings.

Discover the capabilities of InvestingPro for evaluating China ETFs. When researching investments in a complex market like China, detailed data and analytical tools are invaluable. InvestingPro provides robust resources to aid this process.

Access in-depth analysis of China ETFs, easily compare crucial metrics like expense ratios, historical performance (1-year and 5-year returns), holdings breakdowns (including sector and share class exposure), and risk assessments. With InvestingPro, you can benchmark different China ETFs against each other or against broader emerging market indices, helping you make informed decisions aligned with your investment goals and risk tolerance in this specific geography.

Investing in China ETFs offers potential rewards but comes with significant, distinct risks:

• Growth Potential: Access to one of the world’s largest and fastest-growing major economies.
• Diversification: Chinese markets may sometimes exhibit lower correlation with developed markets, potentially offering portfolio diversification benefits (though correlations can increase during global stress).
• Sector Exposure: Opportunity to invest in leading companies within rapidly expanding sectors like technology, e-commerce, and renewable energy.
• Accessibility: ETFs provide a simple way to invest in a market that can be difficult for foreigners to access directly.
• Potentially Attractive Valuations: Market downturns can sometimes present opportunities to invest at lower relative valuations.

• Regulatory and Political Risk: Government policies and interventions can change rapidly and significantly impact specific sectors or companies (e.g., technology, education, real estate), leading to high volatility and potential losses. Geopolitical tensions (especially US-China relations) add another layer of risk.
• Economic Volatility: While growth potential exists, the Chinese economy faces challenges like demographic pressures, debt levels, and potential slowdowns, which can affect market performance. Transparency regarding economic data can also be a concern.
• Market Access & Transparency Issues: Differences in accounting standards, corporate governance practices, and the complex Variable Interest Entity (VIE) structure used by many US-listed Chinese companies pose unique risks. Sudden delisting risks for US-listed ADRs have also been a concern.
• Currency Risk: Fluctuations in the Chinese Yuan (CNY/CNH) relative to the investor’s home currency can impact returns.

Choosing the right China ETF depends heavily on your specific goals and risk appetite:

• This is crucial for China. Understand what the ETF holds: Does it focus on mainland A-shares (like ASHR), offshore H-shares/ADRs (common in MCHI, GXC, PGJ), or a mix? What are the top sector exposures (e.g., tech-heavy like PGJ, financials/industrials in ASHR, broad mix in MCHI/GXC)? Understand the implications of VIE structures if investing in ADR-heavy funds. Use InvestingPro to gain insights into sector allocation, top holdings, and diversification metrics.

• Lower expense ratios mean more of your money stays invested. Compare costs across different China ETFs. Note that ETFs providing access to A-shares (like ASHR) often have slightly higher fees due to operational complexities. Use tools like InvestingPro to confirm the current expense ratio and factor it into your potential return calculations.

• Historical performance isn’t a guarantee of future returns, especially in a market as dynamic and policy-sensitive as China, but it shows how the ETF reacted to past events. Ensure the ETF has sufficient trading volume (liquidity) and reasonable bid-ask spreads for easy buying and selling. Within InvestingPro, you can find detailed performance data and compare returns against relevant benchmarks like emerging market indices.

• Clarify the ETF’s objective. Are you seeking broad, diversified exposure to the overall Chinese market (MCHI, GXC)? Direct access to mainland companies (ASHR)? A focus on high-growth potential (GLCN)? Or concentrated exposure to US-listed tech giants (PGJ)? Align the ETF’s specific theme with your investment thesis and risk tolerance.

A-shares trade on mainland exchanges (Shanghai, Shenzhen) in Renminbi and represent companies more tied to the domestic economy (ASHR focuses here). H-shares are shares of mainland companies listed on the Hong Kong Stock Exchange. ADRs (American Depositary Receipts) represent shares of foreign companies traded on U.S. exchanges (PGJ focuses here). 

Yes, China ETFs are generally considered higher risk than developed market ETFs due to factors like regulatory uncertainty, political risks, economic volatility, less market transparency, and currency fluctuations. Investors should have a higher risk tolerance and a longer investment horizon.

This depends on individual risk tolerance and market outlook. Some see current valuations as attractive after recent declines and anticipate potential government support boosting the economy. Others remain cautious due to ongoing regulatory, political, and economic uncertainties. Thorough research is essential.

They can serve as a satellite holding to potentially enhance long-term growth and provide diversification, given China’s economic significance. However, due to the risks, the allocation size should be carefully considered relative to the investor’s overall portfolio and risk tolerance.