FLCH ETF

The Franklin FTSE China ETF has a low expense ratio of just 0.19% and offers diversification by holding 956 stocks. The top ten holdings, which equal 44% of the assets, are heavily concentrated in the tech and financial sector, I'd like to see it more diversified. Holding ADRs and companies with VIE structure exposes investors to additional risks, which may be prevented by investing into stocks outside the tech sector listed on the Hong Kong Stock Exchange.

China ETFs have faltered lately after a stimulus-induced rally. What lies ahead for these ETFs.

FTSE Franklin China ETF has had a choppy 2024, with only a little over 1% increase YTD. FLCH is a well-rounded product with a lower expense ratio, more stability, wider stock coverage, and a better income angle compared to the most popular Chinese ETF. FLCH's top holding, Tencent, is expected to benefit from multiple tailwinds, including a pickup in mobile gaming, positive earnings growth, cheap valuations and compelling FCF generation.

MCHI: Chinese Stocks Finally Get The Policy Green Light

Chinese equities have started the year on a bearish note. But at current levels, I wonder if valuations have diverged too far from fundamentals.

The Franklin FTSE China ETF continues to rank highly for its industry-low expense ratio. But the fund is now exposed to heightened Chinese economic headwinds. The portfolio no longer screens cheaply given the current backdrop and could still be vulnerable to more downgrades.

Chinese equities have corrected post-Lunar New Year despite an improving fundamental backdrop post-COVID. In tandem, funds with consumer/tech-heavy portfolios like the Franklin FTSE China ETF have suffered.

This year is already looking brighter for China than last, with projections of around 5% growth seen as the result of the country ending its zero-COVID rules and rebounding in 2023.