PGJ ETF

Chinese stocks appear undervalued and could offer diversification from US markets, which are currently priced for perfection. Valuations in China are much lower compared to the US, making it a contrarian buy, especially during periods of negative sentiment. Invesco Golden Dragon China ETF is holding mostly ADRs from technology companies, which comes with additional risks, which I am not comfortable with.

The Invesco Golden Dragon China ETF has marginally outperformed the S&P500 returns since late January. The latest economic data from China indicates a mixed trend in key indicators, but this should not discourage additional investment at this time. While it is not advisable to completely divest from Chinese stocks, investors should be cautious about increasing their exposure to Chinese equities.

China might be reaching a turning point and could present a lucrative opportunity for investors looking to go against the trend. The Invesco Golden Dragon China ETF follows the Nasdaq Golden Dragon China Index, providing access to Chinese businesses. The fund's main investments consist of Alibaba, Yum China, Baidu, NetEase, and JD.com, with a particular emphasis on the Consumer Discretionary industry.

Following three consecutive annual losses, the MSCI China Index isn't doing much to foster confidence among investors in the early innings of 2024. About a month and a half into the year and the widely followed gauge of Chinese equities is lower by 6.11%.

The Chinese government is about to roll out measures to support the Chinese stock market. Chinese stocks are currently heavily discounted due to economic and geopolitical risks, creating an opportunity for risk-tolerant investors. As one of the most beaten-down China ETFs among peers, the PGJ ETF looks like a decent way to benefit from the Chinese government stimulus.

Invesco Golden Dragon China ETF has seen negative returns of 11.2% over the past decade despite China's growing economy. The fund has been impacted by the extended pandemic effects, US-China tensions, and uncertainty about China's economy. While there have been some recent performance improvements, it's still not competitive against other options in the market on multiple metrics.

With China's economy in need of a jumpstart, central bank easing could provide the revitalization it needs. In turn, this could make way for strength in China-focused exchange traded funds (ETFs) such as the Invesco Golden Dragon China ETF (PGJ).

The Invesco Golden Dragon China ETF (PGJ) is the top-performing equity ETF over the past week, propelled by the Chinese stocks' rally. The Chinese stocks rally this week came as Beijing pledged to increase initiatives to bolster China's economy.

The consumer tech-heavy Invesco Golden Dragon China ETF has extended its underperformance in recent months. While the broader Chinese economy has slowed, the consumer remains in good shape – with or without stimulus. Given its exposure to the right parts of the Chinese economy, PGJ remains a worthy growth-oriented portfolio addition.