Exchange-traded funds can offer a simple and inexpensive way to gain exposure to the stock market. These strategies offer exposure to Chinese equities with a large and mid-market capitalization and are considered promising by Morningstar’s fund analysts.
Indeed, European investors are already showing signs of souring on US stocks against the backdrop of Trump’s trade wars, starting to shift money from the US to Europe and China in particular.
Europe-domiciled ETFs focused on Chinese stocks have attracted almost EUR 3.8 billion of net inflows year-to-date, which compares with EUR 1.05 billion of net outflows seen in 2024. February 2025 saw the best monthly result in terms of flows ever recorded for the category.
In general, flows follow performances. And looking at recent returns, such a recovery in interest in China is logical. Since the start of the year, the Chinese equity market – pushed by tech stocks – has performed exceptionally well, after a long period of underperformance.
A Gold Medalist Rating means our analysts believe a fund has the greatest chance of outperforming its category over the long term, while a Silver or a Bronze rating means they believe it will outperform its relevant performance benchmark and/or peer group.
In the case of China equity ETFs, we have three different providers making the list:
- HSBC MSCI China UCITS ETF HMCH
- iShares MSCI China UCITS ETF USD Dist ICHD
- Amundi MSCI China UCITS ETF Acc LCCN
Screening for the Best China Equity ETFs
We screened for ETFs with Gold, Silver or Bronze Medalist Ratings that are 100% assigned by Morningstar analysts (rather than indirectly or quantitatively assigned). None of the three ETFs that made it through the screen hold a Medalist Rating of Gold or Silver, nor are they actively managed.
All of them track the MSCI China NR Index, which captures large and mid-cap representation across China A shares, H shares, B shares, Red chips, P chips and foreign listings (e.g. ADRs). With 580 constituents, the index covers about 85% of this China equity universe. Currently, the index includes Large Cap A and Mid Cap A shares represented at 20% of their free float adjusted market capitalization.
Here’s a closer look at the strategies:
HSBC MSCI China UCITS ETF HMCH
The £871.7 million HSBC MSCI China UCITS ETF rose 42.01% over the past year. The fund beat its benchmark, the Morningstar China Target Market Exposure Index, by 5.32 percentage points. Year to date, the HSBC fund rose 14.18%, while the average fund in its category is up 8.89%.
iShares MSCI China UCITS ETF USD Dist ICHD
The iShares MSCI China UCITS ETF gained 39.21% over the past year, outperforming the average fund in the China equity category, which rose 25.4%. The fund placed in the fourth percentile for performance and beat its benchmark, the Morningstar China Target Market Exposure Index, by 2.52 percentage points. The £3.2 billion fund has gained 12.46% year to date, while the average fund in its category is up 8.89%.
Amundi MSCI China UCITS ETF Acc LCCN
Over the past year, the passively managed Amundi MSCI China UCITS ETF rose 42.46%, while the average China equity fund gained 25.4%. The fund placed in the second percentile for performance and beat its benchmark by 5.77 percentage points. The £544 million fund has climbed 15.53% year to date, outperforming the average fund in its category, which rose 8.89%.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.
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