Comparing China-Focused ETFs: FXI, PGJ, GXC

Want to invest in Chinese stocks but don't know enough about individual Chinese companies? You may consider investing in China-focused ETFs.

ETFs, or exchange traded funds, are investment vehicles that can be bought and sold like stocks. They differ from stocks in that they tend to focus on groups of companies, sectors or markets as a whole, rather than on individual firms. They're also usually more expensive to trade because they charge fees on top of trading commissions when you buy and sell them. But they've opened up a whole new world of money-making possibilities to investors, including the ability to invest in top-performing stocks from a single country like China.

Probably the three most well-known China-focused ETFs traded on U.S. stock markets today are FXI, PGJ and GXC. FXI (iShares FTSE/Xinhua China 25 Index Fund) has been around the longest and is traded the most of the three. It's part of the Barclays Global Fund Advisors fund family and tracks the performance of the 25 largest and most liquid Chinese stocks listed and trading on the Hong Kong Stock Exchange.

PGJ (Golden Dragon Halter USX China Portfolio Fund) was created a couple months after FXI and is part of the PowerShares fund family. It's not as popular as FXI, but is being traded more and more. PGJ tracks an index which is comprised of U.S.-listed securities of companies that derive the majority of their income from China.

GXC (SPDR S&P China ETF) is part of the State Street Global Advisors Fund family and only made its debut early this year, so it's not traded as much as the other two. It tracks an index that includes publicly listed China-based companies whose shares are legally available to foreign investors. This means GXC is more like FXI, and less like PGJ.

It's interesting to note that although FXI is the most popular of these China-focused ETFs, it is the most expense to buy and sell. (Its expense ratio and management fees are higher than those of PGJ and GXC.) At the same time, FXI is not performing as well as GXC or PGJ, year to date. (Based on data provided by Google Finance.)

Below I have listed each of these China-focused ETFs and included their performance (since Jan. 1, 2007) the fees they charge, and the ten largest companies in the indexes they track.

iShares FTSE/Xinhua China 25 Index Fund
Ticker: FXI
Performance: +44.68%
Inception date: Oct. 5, 2004
Gross expense ratio: 0.74%
Management fee: 0.74%
Ten top holdings: China Mobile, Ltd., China Life Insurance Co., Ltd., PetroChina Co., Ltd., Industrial & Commercial Bank of China, China Construction Bank Corp., Ping An Insurance Group Co. of China Ltd., China Shenhua Energy Co., Ltd., CNOOC Ltd. (an oil company), China Telecom Corp., Ltd., China Merchants Bank Co., Ltd.

PowerShares Golden Dragon Halter USX China Portfolio Fund
Ticker: PGJ
Performance: +51%
Inception date: Dec. 9, 2004
Gross expense ratio: 0.73%
Management fee: 0.50%
Ten top holdings: Suntech Power Holdings Co., Ltd., China Mobile Ltd., PetroChina Co., Ltd., Baidu.com Inc., China Netcom Group Corp. (Hong Kong) Ltd., China Petroleum & Chemical Corp., China Telecom Corp., Ltd., China Unicom Ltd. (a telecom company), China Life Insurance Co., Ltd., CNOOC Ltd. (an oil company)

SPDR S&P China ETF
Ticker: GXC
Performance: +57% (since inception)
Inception date: March 19, 2007
Gross expense ratio: 0.60%
Management fee: 0.59%
Ten top holdings: China Mobile Ltd., Petrochina Co., China Life Insurance, China Construction Bank, CNOOC Ltd. (an oil company), China Petroleum, Industrial & Commercial Bank of China, China Shenhua Energy., Ping An Insurance, Bank Of China Ltd.