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ADB Expects China to Remain Strong: 3 Best Fund Picks
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The Asian Development Bank (ADB) stated in a report on Apr 11 that China would keep growing more than 6% in 2018 as well as 2019. The recent shift in focus from manufacturing to services has been pivotal in China’s economic growth story.
Finally, China’s president Xi Jinping recently announced plans to patronize global trade and set up policies to boost foreign investments. Under such circumstances, investing in mutual funds having significant exposure on China seems prudent.
China’s Economy to Remain Sturdy
Despite China’s credit tightening, it has witnessed humungous growth in the past one year. If records are to be considered, China grew at an amazing 6.9% annual rate in 2017. In fact, the country experienced growth of 6.8% in the last three months of 2017.
Thus, growth actually slowed in the first quarter of 2018 to 6.7%. The reason for such a cooldown has been attributed to China’s efforts to rein in its humungous debt load as well as the recent weakness in the property market.
In a report published in Asian Development Outlook (ADO) 2018, the Asian Development Bank stated that it expects the Chinese economy to flourish at a pace of 6.6% in 2018. Based in Manila, Philippines, the bank also expects the Asian giant to exhibit 6.4% growth in 2019. Such stupendous growth is expected to be achieved on the back of increased demand for Chinese products in both domestic and international markets.
Further, China’s growth has mainly been propelled by strength in its services sector, which advanced 8% in 2017. Also, the fact that China’s government focuses more on “addressing debt issues” that have riddled the economy would go a long way in propelling the country’s growth.
Xi Plans to Open China to More Global Trade
In a speech at the Boao Forum in Hainan province in China on Apr 11, Xi Jinping said that he is optimistic about the Chinese economy. He also stated that China is opening up new avenues for both domestic and foreign investments, indicating that he supports globalization.
Xi added that the Chinese government plans to lower tariffs on autos as well as protect the intellectual property rights of foreign companies operating within China. He also stated that China would adopt newer policies, which would lead to a massive opening up of the second-largest economy to the world.
3 Best Fund Choices
Given such circumstances, we have highlighted three mutual funds that are poised to gain significantly from strength in the Chinese economy. These funds also carry a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). Moreover, these funds have encouraging three and five-year returns. Additionally, the minimum initial investment is within $5000.
We expect these funds to outperform their 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 future 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).
ProFunds UltraChina Investor (UGPIX - Free Report) seeks returns that correspond to two times the daily performance of the BNY Mellon China Select ADR Index. The fund tracks the performances of a group of companies situated primarily in China and Hong Kong and trade in the U.S. stock exchanges.
This Sector – China-Equity product has a history of positive total returns for over 10 years. Specifically, the fund's returns over the three and five-year benchmarks are 14.2% and 21.1%, respectively. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.
UGPIX has a Zacks Rank #1 and an annual expense ratio of 1.09%, which is below the category average of 1.68%.
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.
This Sector – China-Equity product has a history of positive total returns for over 10 years. Specifically, the fund's returns over the three and five-year benchmarks are 15.4% and 11.6%, respectively. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.
MCHFX has a Zacks Rank #1 and an annual expense ratio of 1.80%, which is below the category average of 2.01%.
Fidelity China Region (FHKCX - Free Report) 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.
This Sector – China-Equity product has a history of positive total returns for over 10 years. Specifically, the fund's returns over the three and five-year benchmarks are 10% and 12.5%, respectively. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.
FHKCXhas a Zacks Rank #2 and an annual expense ratio of 0.99%, which is below the category average of 1.68%.
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ADB Expects China to Remain Strong: 3 Best Fund Picks
The Asian Development Bank (ADB) stated in a report on Apr 11 that China would keep growing more than 6% in 2018 as well as 2019. The recent shift in focus from manufacturing to services has been pivotal in China’s economic growth story.
Finally, China’s president Xi Jinping recently announced plans to patronize global trade and set up policies to boost foreign investments. Under such circumstances, investing in mutual funds having significant exposure on China seems prudent.
China’s Economy to Remain Sturdy
Despite China’s credit tightening, it has witnessed humungous growth in the past one year. If records are to be considered, China grew at an amazing 6.9% annual rate in 2017. In fact, the country experienced growth of 6.8% in the last three months of 2017.
Thus, growth actually slowed in the first quarter of 2018 to 6.7%. The reason for such a cooldown has been attributed to China’s efforts to rein in its humungous debt load as well as the recent weakness in the property market.
In a report published in Asian Development Outlook (ADO) 2018, the Asian Development Bank stated that it expects the Chinese economy to flourish at a pace of 6.6% in 2018. Based in Manila, Philippines, the bank also expects the Asian giant to exhibit 6.4% growth in 2019. Such stupendous growth is expected to be achieved on the back of increased demand for Chinese products in both domestic and international markets.
Further, China’s growth has mainly been propelled by strength in its services sector, which advanced 8% in 2017. Also, the fact that China’s government focuses more on “addressing debt issues” that have riddled the economy would go a long way in propelling the country’s growth.
Xi Plans to Open China to More Global Trade
In a speech at the Boao Forum in Hainan province in China on Apr 11, Xi Jinping said that he is optimistic about the Chinese economy. He also stated that China is opening up new avenues for both domestic and foreign investments, indicating that he supports globalization.
Xi added that the Chinese government plans to lower tariffs on autos as well as protect the intellectual property rights of foreign companies operating within China. He also stated that China would adopt newer policies, which would lead to a massive opening up of the second-largest economy to the world.
3 Best Fund Choices
Given such circumstances, we have highlighted three mutual funds that are poised to gain significantly from strength in the Chinese economy. These funds also carry a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). Moreover, these funds have encouraging three and five-year returns. Additionally, the minimum initial investment is within $5000.
We expect these funds to outperform their 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 future 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).
ProFunds UltraChina Investor (UGPIX - Free Report) seeks returns that correspond to two times the daily performance of the BNY Mellon China Select ADR Index. The fund tracks the performances of a group of companies situated primarily in China and Hong Kong and trade in the U.S. stock exchanges.
This Sector – China-Equity product has a history of positive total returns for over 10 years. Specifically, the fund's returns over the three and five-year benchmarks are 14.2% and 21.1%, respectively. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.
UGPIX has a Zacks Rank #1 and an annual expense ratio of 1.09%, which is below the category average of 1.68%.
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.
This Sector – China-Equity product has a history of positive total returns for over 10 years. Specifically, the fund's returns over the three and five-year benchmarks are 15.4% and 11.6%, respectively. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.
MCHFX has a Zacks Rank #1 and an annual expense ratio of 1.80%, which is below the category average of 2.01%.
Fidelity China Region (FHKCX - Free Report) 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.
This Sector – China-Equity product has a history of positive total returns for over 10 years. Specifically, the fund's returns over the three and five-year benchmarks are 10% and 12.5%, respectively. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.
FHKCXhas a Zacks Rank #2 and an annual expense ratio of 0.99%, which is below the category average of 1.68%.
Want key mutual fund info delivered straight to your inbox?
Zacks' free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >>