How to Invest in China

Investing in China is becoming more and more popular because China continues to grow at a fast pace. You do not have to live in China to invest in the future of the country. There are various investment opportunities in China that American investors can take full advantage of. There are specific investment funds and ETFs that provide for investments in this area.

Funds

Private investors should consider funds that invest solely in China. These are easy to find, and once you research, you should get a better idea of which one suits you best. Some of the best funds include: Jupiter China, Invesco Perpetual Hong Kong and China, Gartmore China Opportunities, First State Greater China Growth, Baring China Growth and Neptune China.

You can also find exchange traded funds that track a particular market. For example, the iShares FTSE/Xinhua China 25 is very common among American investors. If you want to invest in China, but do not want to put in a lot of work buying and selling on a regular basis, you should consider an exchange traded fund.

Follow the Professionals

Since you probably do not know as much about the Chinese market as you do about your own, you will want to watch what the professionals are doing. You don’t always have to do the same as everybody else, but it will keep you relatively safe. Unlike stocks in the United States, information on those in China can be hard to come by. For this reason, doing your homework before investing is no easy task. Professionals have the right connections and access to the appropriate details.

With all this in mind, it may also be worthwhile to consider investing in mutual funds. This way you can get access to the growth taking place in China, without a high risk.

Size is Important

Generally speaking, knowing anything about the average market capitalization of the funds you are interested in can help you determine the size of the company. Most commonly, you will find market caps that range from approximately $2 billion all the way up to $13 billion. Small caps are those in the $2 billion and below range. Those with caps of more than $8 billion fit into the large cap category.

Risk

If you are trying to catch lightning in a bottle and jump on a fast growing company, stick with those in the small cap category. If too much risk scares you, and you are simply trying to diversify by investing in China, consider funds with an average market cap of $6 billion or more. While there are many ways to invest in China, make sure you know your options and follow what the professionals are doing to avoid losing your shirt with any investment.