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I would pick Matthews Asia if you're strictly talking about adding exposure to China (and possibly the surrounding SE Asian region if you wanted to).
Personally I combine both because I want EM exposure beyond China. The other reason why I also really like DEM but don't use it as my solo diversified EM exposure is because of the way it's constructed, it currently has little exposure to consumer oriented stocks and has more in Financials, Telecom, IT, Utilities and Materials.
My Asia exposure is from DEM, DGS, MACSX, MSMLX, Jardine Matheson (stock), Hutchison Whampoa (stock) and I am still looking for other single company names in Asia. That said, I wouldn't want any single-country Asian funds. A couple of years ago I had a gigantic allocation to Asia, but now it's definitely more reasonable and a comfortable amount for a longer-term play/holding.
Reply to @Kenster1_GlobalValue: Thank you. For now I am using Matthew Asia Dividend, MAPIX for Asian region exposure. Other diversified foreign funds generally avoid China directly. Many including Oakmark prefers to invest developed countries such as Japan and Australia which benefit from doing business with China. Another actively managed EM fund I use, Lazard Emerging Market Equity, LZEMX, have little exposure in China due to corporate governance issues.
The dividend component of DEM is interesting and perhaps it is less risky approach. More homework...
Reply to @scott: I agree that single country China funds/ETF is not such good idea for risk management perspective. For now I am using mainly MAPIX to gain direct exposure.
As I recalled there were several Chinese companies listed in US stock Exchanges have accounting problems?
How do you reconcile with the large ask/bid spreads of DEM and DGS when they are traded at thin daily volume (i.e. 50,000 shares) compared to the Vanguard's and iShares ETFs (at least 10X) ?
Reply to @Sven: DEM/DGS are commission-free, but I suppose after trying to buy some Asian individual stocks that are barely traded at all, the spreads on DEM/DGS don't seem so bad.
Interestingly, EELV (PowerShares S&P Emerging Markets Low Volatility Portfolio ETF) has a unique EM country allocation --- It'll be interesting to see how this one does.
Reply to @Kenster1_GlobalValue: Today the trade volume is only 1,150 shares. Interesting, Malaysia is the top country at 22%, and China is not even on the top 10.
As folks have pointed out, there are a number of ways to have exposure to China, both directly and indirectly. Another way would be to consider how China grows, which has a lot to do with natural resources, infrastructure, etc. So an option could be to own a resources fund whose companies do a lot of business in China, or a fund that is geared to infrastructure spending. The latter, because of its narrower investment mandate, will be more volatile than a diversified resources fund. Keep in mind that a diversified EM fund will typically have very little in China, so whether it is Matthews or one of the two ideas I suggested, having a meaningful exposure will entail at least one additional investment.
Reply to @BobC: I think you'll continue to see Canadian resources businesses doing business with Asia - see Pan-Orient Energy yesterday (a Canadian company w/exposure in Indonesia and Thailand), up 24% on apparently a new find. Still, I think you'll continue to see Asia looking to buy up natural resources in Canada - which seems more than willing to work with and seek new customers in Asia.
Reply to @scott: I agree, Scott. Canada, Australia, Indonesia, and even Brazil have a number of companies that could see big benefits from China-related business. For most investors, individual companies may be less practical than a fund, but the ones you have mentioned in the posts are certainly good options. We use PIPFX as a global resources fund, with significant Canada exposure. Also use PYZ for domestic basic material exposure, since most of these companies have a lot of their business in the emerging economies, especially China. A much more volatile option is PXR, but it is geared specifically to EM infrastructure.
Reply to @BobC: ENY (Guggenheim Canadian Energy Income ETF) may be kind of interesting for those seeking income and Canadian energy. I don't own it, but am looking at it.
I did sell my MLP fund yesterday and took profits in that. It's an excellent fund and I'd look at it again if it pulled back significantly, but it was up and I think MLPs may be rather overbought because people have been attracted to the yield and now you're having new MLP fund managers ringing the opening bell this morning. I don't know, I like the MLP asset class a great deal, but there comes a point where I think people are piling in overly enthusiastically due to yield. I mean, Kinder Morgan at 52-week highs; I'm seeing models that appear reasonable with a value estimate nearly 15% lower. Again, not saying that these aren't great companies, but that they're overbought.
I actually think there are some better values in natural resource companies that provide little-or-no yield.
I also own Brookfield Infrastructure Partners (BIP), an opportunistic infrastructure company that provides a 5% yield and includes Australian rail, among other global holdings (a Chilean toll road, US energy transmission, timber, etc.) I think BIP is overbought (although I've thought that for a little while now), but I am keeping it as a long-term hold as I like the underlying company a great deal and I think there's really nothing like it - it's very unique. The company is a spin-off from parent Brookfield Asset Management. I also own Loews, which has stakes in Diamond Offshore Drilling, Boardwalk Pipeline Partners and Highmount Exploration/Production (among other things.)
I also own DWGOX as an aggressive (and largely Canadian) gold fund.
Comments
Personally I combine both because I want EM exposure beyond China. The other reason why I also really like DEM but don't use it as my solo diversified EM exposure is because of the way it's constructed, it currently has little exposure to consumer oriented stocks and has more in Financials, Telecom, IT, Utilities and Materials.
http://matthewsasia.com/perspectives-on-asia/asia-weekly/default.fs
https://www.spdrs.com/product/fund.seam?ticker=EDIV
Another new EM Div ETF just started ---
iShares Dow Jones EM Dividend Select ETF (DVYE)
DVYE Fact Sheet:
http://us.ishares.com/content/stream.jsp?url=/content/en_us/repository/resource/fact_sheet/dvye.pdf&mimeType=application/pdf
DVYE Index Methodology:
http://www.djindexes.com/mdsidx/downloads/meth_info/Dow_Jones_Emerging_Markets_Select_Dividend_Index_Methodology.pdf
iShares also just started the MSCI Emerging Markets VALUE ETF (EVAL):
http://us.ishares.com/product_info/fund/overview/EVAL.htm
And then there's also....
iShares MSCI EM Minimum Volatility ETF (EEMV)
http://us.ishares.com/product_info/fund/overview/EEMV.htm
MSCI EM Minimum Volatility Index Fact Sheet:
http://www.msci.com/resources/factsheets/MSCI_Emerging_Markets_Minimum_Volatility_Indices.pdf
The dividend component of DEM is interesting and perhaps it is less risky approach. More homework...
As I recalled there were several Chinese companies listed in US stock Exchanges have accounting problems?
How do you reconcile with the large ask/bid spreads of DEM and DGS when they are traded at thin daily volume (i.e. 50,000 shares) compared to the Vanguard's and iShares ETFs (at least 10X) ?
http://www.invescopowershares.com/products/overview.aspx?ticker=EELV
I did sell my MLP fund yesterday and took profits in that. It's an excellent fund and I'd look at it again if it pulled back significantly, but it was up and I think MLPs may be rather overbought because people have been attracted to the yield and now you're having new MLP fund managers ringing the opening bell this morning. I don't know, I like the MLP asset class a great deal, but there comes a point where I think people are piling in overly enthusiastically due to yield. I mean, Kinder Morgan at 52-week highs; I'm seeing models that appear reasonable with a value estimate nearly 15% lower. Again, not saying that these aren't great companies, but that they're overbought.
I actually think there are some better values in natural resource companies that provide little-or-no yield.
I also own Brookfield Infrastructure Partners (BIP), an opportunistic infrastructure company that provides a 5% yield and includes Australian rail, among other global holdings (a Chilean toll road, US energy transmission, timber, etc.) I think BIP is overbought (although I've thought that for a little while now), but I am keeping it as a long-term hold as I like the underlying company a great deal and I think there's really nothing like it - it's very unique. The company is a spin-off from parent Brookfield Asset Management. I also own Loews, which has stakes in Diamond Offshore Drilling, Boardwalk Pipeline Partners and Highmount Exploration/Production (among other things.)
I also own DWGOX as an aggressive (and largely Canadian) gold fund.
PIPFX is an excellent aggressive resources fund.
These custom indexes the various ETFs use seem to result in concentrations of one sort or another, many of them very different from each other.