China’s equity market remains under pressure due to structural challenges and policy uncertainty, yet many analysts continue to see signs of undervaluation. For investors with a contrarian mindset or those seeking exposure to emerging markets, Chinese ETFs offer a variety of risk-reward tradeoffs.
In this blog post, we compare six major ETFs that provide exposure to the China and Hong Kong markets — each with different strategies, holdings, and sector focuses. Whether you’re aiming for concentrated growth or broad market exposure, this overview will help guide your decision-making.
📊 ETF Comparison Table
ETF | Strategy Focus | Sector Emphasis | Expense Ratio | Top Holdings |
|---|---|---|---|---|
DRAG | Highly concentrated | Mega-cap tech | 0.59% | Xiaomi, Tencent, BYD, Alibaba, PDD |
KWEB | Internet platform growth | E-commerce, Digital services | 0.70% | Tencent, Alibaba, JD.com, PDD, Meituan |
FXI | State-owned enterprise stability | Financials, Energy | 0.74% | Tencent, CCB, Alibaba, Meituan, Xiaomi |
CQQQ | Innovation-centric tech | Software, AI, Semiconductors | 0.65% | Tencent, Meituan, Baidu, Kuaishou, PDD |
GXC | Broad-based diversification | Multi-sector, S&P China BMI | 0.59% | Tencent, Alibaba, Xiaomi, CCB, Meituan |
MCHI | Benchmark-style exposure | MSCI China Index, balanced | 0.59% | Tencent, Alibaba, Xiaomi, CCB, Meituan |
🔎 ETF Profiles
1️⃣ DRAG ETF — Roundhill China Dragons ETF
- AUM: $29.8M Price: $24.69 Expense Ratio: 0.59%
- Strategy: Focused portfolio of 5–10 top Chinese tech giants
- Strengths:
- Targets globally competitive tech leaders
- Listed in the U.S. via ADRs, improving accessibility
- High conviction but more concentrated risk
- Top Holdings:
- Xiaomi (Smartphones, IoT) – 19.23%
- Tencent (Messaging, Gaming, Cloud) – 18.02%
- BYD (EVs, Batteries, Semiconductors) – 17.01%
- Alibaba (E-commerce, Cloud, Fintech) – 15.60%
- Pinduoduo (Social commerce, Temu) – 15.24%
2️⃣ KWEB ETF — KraneShares CSI China Internet ETF
- AUM: $6.4B Price: $33.30 Expense Ratio: 0.70%
- Strategy: Tracks China’s internet and platform economy via CSI Overseas China Internet Index
- Highlights:
- Invests in U.S. and HK-listed Chinese internet companies
- Includes small/mid-cap tech firms
- Correlated with growth in digital services
- Top Holdings:
- Tencent – 10.08%
- Alibaba – 9.11%
- Meituan – 7.60%
- Pinduoduo – 7.06%
- JD.com – 6.01%
3️⃣ FXI ETF — iShares China Large-Cap ETF
- AUM: $6.0B Price: $35.62 Expense Ratio: 0.74%
- Strategy: Exposure to large-cap state-owned enterprises via FTSE China 50 Index
- Highlights:
- Emphasizes financial and energy sectors
- Limited exposure to new economy tech
- Offers stability through established players
- Top Holdings:
- Tencent – 8.85%
- Xiaomi – 7.60%
- Alibaba – 7.51%
- Meituan – 6.16%
- China Construction Bank – 5.53%
4️⃣ CQQQ ETF — Invesco China Technology ETF
- AUM: $1.0B Price: $41.99 Expense Ratio: 0.65%
- Strategy: Concentrated tech play, tracks FTSE China Incl A 25% Technology Capped Index
- Highlights:
- Known as “China's QQQ”
- Focused on semiconductors, e-commerce infrastructure, software
- Geared toward innovation and growth
- Top Holdings:
- Tencent – 10.02%
- Meituan – 8.47%
- Pinduoduo – 8.14%
- Baidu – 6.88%
- Kuaishou – 5.90%
5️⃣ GXC ETF — SPDR S&P China ETF
- AUM: $0.4B Price: $87.23 Expense Ratio: 0.59%
- Strategy: Tracks S&P China BMI Index, investing across A-shares and H-shares
- Highlights:
- Highly diversified across sectors
- Represents a broad slice of the Chinese market
- Lower top-heavy bias
- Top Holdings:
- Tencent – 12.67%
- Alibaba – 7.30%
- Xiaomi – 3.59%
- China Construction Bank – 3.09%
- Meituan – 2.98%
6️⃣ MCHI ETF — iShares MSCI China ETF
- AUM: $6.2B Price: $53.59 Expense Ratio: 0.59%
- Strategy: Balanced exposure to Chinese large- and mid-cap companies via MSCI China Index
- Highlights:
- Broad-based sector allocation: tech, consumer, finance
- Well-diversified; ideal for long-term passive investors
- Top Holdings:
- Tencent – 16.72%
- Alibaba – 9.85%
- Xiaomi – 4.70%
- China Construction Bank – 3.76%
- Meituan – 3.39%
🧭 Highlights by ETF Strategy
- DRAG: Hyper-focused on China’s leading tech giants listed via ADRs. Ideal for investors seeking aggressive growth through concentrated bets.
- KWEB: A pure play on China’s internet economy. Great for those expecting a rebound in digital consumption.
- FXI: Focuses on China’s state-owned blue-chip stocks. Lower growth, but perceived as more stable.
- CQQQ: A China-themed version of QQQ — ideal for betting on innovation and emerging tech.
- GXC / MCHI: Provide the most comprehensive exposure to China’s equity market, with strong diversification and long-term orientation.
Conclusion
Although all six ETFs grant access to Chinese and Hong Kong equities, their investment approaches differ widely — from tightly focused portfolios to broad, diversified strategies. Choosing the right one depends on your risk tolerance, time horizon, and investment thesis.
Despite ongoing volatility in China’s markets, opportunities persist for those willing to take a long-term view.
If you'd like to explore more about China tech ETFs, you may also find it helpful to check out related posts covering focused China tech funds like DRAG, TIGER China Tech TOP10, and KODEX China Tech TOP10.
Check out the post below for more details ⬇️
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