ETFs – Shortcut to global markets

By their nature, ETFs are a relatively new financial instrument, that tracking the prices of a particular commodity, bonds, asset portfolio, or index funds. Unlike trusted funds, ETFs are traded on the stock exchange as an individual share. For this reason, the price change for ETFs is much more volatile than the ordinary trust fund. The other major difference between ETFs and the trust fund is that the exchange traded fund does not provide information on net assets and its value is determined on a market-based basis between sellers and buyers. The main advantage of ETFs is that they save investors the whole process of analyzing and selecting thousands of shares.

By owning the ETF, investors get a full diversification of the portfolio, with the flexibility of stock trading, which allows short sales and margin purchases. Another advantage is that the cost ratios for most ETFs are lower than those of the average common fund. When you buy and sell ETFs, you have to pay the same commission to your broker, which you would pay for every ordinary order.

Exchange traded funds can be inverse and tracking the movement of a sector, economy, raw material or others.

Let’s look at several ETFs on the Chinese market, tracking the development of the local economy.

1. Direxion Daily FTSE China Bull 3X ETF (YINN) – YINN is a leveraged exchange traded fund that multiplies FTSE China 50 with 300%. In other words, if FTSE China 50 (index representing the 50 largest Hong Kong-traded companies) rose by 1%, YINN would rise by 3%.

– Average volume: 1 522 925
– Net assets: $ 406.42m.
– Average daily return: 0.75%
– Yield for 2017: 185.94%
– Cost factor: 0.95%

2. ProShares Ultra FTSE China 50 (XPP) – XPP also tracks the 50 largest companies traded in Hong Kong but is a classic ETF. In other words, if FTSE China 50 rises by 1%, XPP will also register 1% growth.

Average volume: 16 964
– Net assets: $ 73.15m.
– Average daily return: 0.49%
– Yield for 2017: 109%
– Cost factor: 0.95%

3. Global X China Materials ETF (CHIM) – CHIM is a classic ETF tracking the 50 largest Chinese companies in the raw materials sector by selecting its investments in market capitalization.

– Average volume: 3 035
– Net assets: $ 5.88m.
– Average daily return: 0.21%
– Yield for 2017: 47.28%
– Cost factor: 0.65%