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China Sees Fastest Growth in 7 Years: 3 Funds to Gain

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For the first time in 7 years, China’s economic growth has moved north rather than south. The world’s second-largest economy expanded 6.9% year over year to around $12.84 trillion, registering the fastest growth in seven years, according to the National Bureau of Statistics (NBS).

Robust exports and an uptick in consumer spending were cited to be the reasons for the rapid expansion. Synchronized expansion in the global economy which drove demand for semiconductors and other technology products has been a boon for China, with exports growing at the fastest clip in four years. The country’s exports grew almost 11% in 2017 from the prior year, while the combined value of exports and imports rose 14.2%. 

Consumption, in fact, was the primary driver. It contributed almost 58.8% to GDP growth last year, indicating the government’s successful attempt to rejig the economy from being export driven to one that depends more on consumption. Retail sales of consumer goods went up 10.2% in 2017 from the previous year (read more: Red Dragon Clocks Fastest Growth in 7 Years: Top 5 Gainers).

Play the Stellar Growth With These 3 China Funds

As China’s economy is all fired up, adding sound China mutual funds focusing on the manufacturing and service sectors to your portfolio seems judicious. We have, thus, highlighted three funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). We expect these funds to outperform peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance but also on the likely success of the fund.

The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).

Fidelity China Region (FHKCX - Free Report) , with a Zacks Rank #2, invests the majority of its assets in securities of Hong Kong, Taiwan, and China issuers and other investments that are tied economically to the China region. It invests primarily in common stocks.

As of the last filing, the fund allocates in two major groups — Emerging Market and Large Growth. The Fidelity China Region fund, managed by Fidelity, carries an expense ratio of 0.99%, less than the category average of 1.71%. Moreover, FHKCX requires a minimum initial investment of $2,500.

FHKCX has a history of positive total returns for over 10 years.  Specifically, the fund’s returns over the 1, 3, 5 year benchmarks are 52.9%, 12.2% and 12.4%, respectively.

Matthews China Investor (MCHFX - Free Report) seeks to achieve its objective by investing a major portion of its net assets, which include borrowings for investment purposes, in the common and preferred stocks of companies located in China. The fund sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

As of the last filing, the fund allocates in two major groups — Emerging Market and Large Growth. The Matthews China Investor fund, managed by Matthews Asia, carries an expense ratio of 1.18%, less than the category average of 1.71%. Moreover, MCHFX requires a minimal initial investment of $2,500.

MCHFX has a history of positive total returns for over 10 years.  Specifically, the fund’s returns over the 1, 3, 5 year benchmarks are 66.3%, 18.3% and 11.2%, respectively.

Fidelity Advisor China Region A (FHKAX - Free Report) , with a Zacks Rank #2, seeks long-term growth of capital. The fund invests a large portion of its assets in securities of Hong Kong, Taiwan and China issuers and other investments that are tied economically to the region around China. The fund uses fundamental analysis of factors such as each issuer's financial condition and industry position to select investments.

As of the last filing, the fund allocates in two major groups — Emerging Market and Large Growth. The Fidelity Advisor China Region A fund, managed by Fidelity, carries an expense ratio of 1.29%, less than the category average of 1.71%. Moreover, FHKAX requires a minimal initial investment of $2,500.

FHKAX has a history of positive total returns for over 10 years.  Specifically, the fund’s returns over the 1, 3, 5 year benchmarks are 52.5%, 11.9% and 12.1%, respectively.

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