Best Etfs To Invest In Alibaba And Chinese Tech

Alibaba Group Holding Ltd. is a company in the U.S. stock market that has grown to become one of the world's largest internet marketplaces. With the rise of e-commerce sales in China, investors are keen to explore mutual funds and exchange-traded funds (ETFs) that hold Alibaba shares. Here is an introduction to ETFs that invest in Alibaba, including their performance, diversification, and potential risks.

Vanguard FTSE Emerging Markets ETF (VWO)

The Vanguard FTSE Emerging Markets ETF (VWO) is a popular choice for investors seeking exposure to emerging markets, including China and other developing economies. While I cannot confirm if Alibaba is part of the VWO ETF, here is some information about it.

The VWO ETF tracks the performance of the FTSE Emerging Markets Index, providing diversified exposure to a broad range of emerging markets. It is a passive fund that aims to replicate the index's performance by investing in a representative sample of the index's stocks. This approach keeps costs low, with an expense ratio of just 0.10%, making it an attractive option for long-term investors.

The ETF provides exposure to a wide range of sectors, including consumer discretionary, financials, information technology, and more, across various emerging markets. As of its latest reporting, China accounted for around 35% of the fund's country allocation, followed by Taiwan, India, Brazil, and South Africa. This allocation makes the fund particularly sensitive to the performance of the Chinese market, which has experienced significant growth in recent years, driven by the technology and consumer sectors.

The VWO ETF has delivered strong returns over the years, outperforming some of its peers. It has a history of providing higher returns than its benchmark, the FTSE Emerging Markets Index, and has consistently been among the top-performing emerging market ETFs. The fund's performance is influenced by the overall health of emerging markets, and its heavy weighting towards China means that it can be impacted by any economic or regulatory changes in that country.

The ETF has a relatively low price-to-earnings ratio compared to other emerging market funds, making it an attractive option for value investors. It also offers a higher dividend yield than many of its peers, providing a source of income for investors. The fund's diversification across sectors and countries helps to manage risk, ensuring that a single market or sector does not dominate the portfolio.

iShares MSCI China ETF (MCHI)

MCHI provides targeted access to the Chinese stock market and can be used by investors to express a single-country view. The fund's largest holdings include Tencent, Alibaba, China Construction Bank, and Baidu. As of May 15, 2018, these top five names made up roughly 44% of the fund's 156-stock portfolio.

MCHI has experienced positive returns, with a year-to-date (YTD) NAV total return of 16.61% as of December 4, 2024. The fund has also paid dividends, with the last dividend payment of $0.19 per share made on June 17, 2024.

Overall, iShares MSCI China ETF (MCHI) offers investors a diversified way to gain exposure to the Chinese market and some of its largest companies, including Alibaba.

ARK Next Generation Internet ETF (ARKW)

The ARK Next Generation Internet ETF (ARKW) is an actively managed exchange-traded fund (ETF) that seeks long-term capital growth by investing primarily in domestic and foreign equity securities of companies relevant to the fund's investment theme of next-generation internet. The fund typically invests at least 80% of its assets in such companies, which are focused on and expected to benefit from shifting technology infrastructure to the cloud, enabling mobile, new, and local services. These companies may develop, produce, or enable:

• Shared technology, infrastructure, and services
• Internet-based products and services
• New payment methods
• Big data
• The Internet of Things
• Social distribution and media

ARKW's total net assets are $1.715 billion, and its net expense ratio is 0.87%. It has 21.4 million shares outstanding and an average volume of 304,690.

ARKW is managed by Cathie Wood's Ark Invest, which has made notable moves such as exiting its position in the Grayscale Bitcoin Trust (GBTC) and buying the ProShares Bitcoin Strategy ETF (BITO). Wood anticipates the approval of several spot bitcoin ETFs by the Securities and Exchange Commission.

Invesco BLDRS Emerging Markets 50 ADR Index Fund

The Invesco BLDRS Emerging Markets 50 ADR Index Fund (ADRE) is an investment trust incorporated in the USA. The fund tracks the S&P Emerging 50 ADR Index, which follows approximately 50 depository receipts from emerging markets. As of January 26, 2021, the fund's total return for the year was 10.70%, with a 3-year return of 10.91% and a 5-year return of 21.01%.

ADRE is the oldest of the emerging market large-cap ETFs, launched when international ETFs were gaining traction. The fund's strategy is to track only ADRs, which has advantages and drawbacks. On the one hand, the Tradability score for ADRE can be high, as large share blocks can be easily created by market makers. On the other hand, ADRE can exhibit strong country biases that differ from the true market portfolio.

ADRE's top 10 holdings include well-known companies such as Taiwan Semiconductor Manufacturing Co., Ltd. (21.49%), Alibaba Group Holding Ltd. (18.18%), HDFC Bank Limited (4.70%), and JD.com, Inc. (4.33%). As of January 26, 2021, these top 10 holdings constituted 68.23% of the fund's weighting.

The fund has an MSCI ESG Fund Rating of BBB, based on a score of 5.02 out of 10, indicating that it consists of companies that show strong and/or improving management of financially relevant environmental, social, and governance issues. Invesco BLDRS Emerging Markets 50 ADR Index Fund ranks in the 31st percentile within its ESG peer group and the 46th percentile globally.

Vanguard Primecap Fund (VPMCX)

The Vanguard Primecap Fund (VPMCX) is a large- and mid-capitalization growth fund that was launched in 1984. It is managed with a long-term perspective, low turnover, and a well-established investment strategy. One unique feature of the Primecap fund is that it employs multiple portfolio managers who independently manage a portion of the fund, providing diversification of thought.

With $76 billion in total assets and a 0.38% net expense ratio, VPMCX is one of the largest fund holders of Alibaba (BABA) shares, owning 9.6 million shares worth $1.42 billion as of February 2022. This means that Alibaba makes up just under 2% of the VPMCX portfolio.

The fund seeks long-term growth of capital by investing in common stocks that are chosen based on their earning potential, growth potential, and quality of management. VPMCX has a 52-week range of 124.44-154.42 and a YTD Lipper Ranking of Quintile 1 (19th percentile).

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