Latest news with #FXI
CNBC
29-05-2025
- Business
- CNBC
These big international ETFs are outperforming the S&P 500. How to add this exposure to your portfolio
As markets grapple with President Donald Trump's evolving tariff policy, returns outside of the U.S. are looking especially attractive. Several region-specific exchange-traded funds are seeing a strong 2025, far outperforming the S & P 500 which is only marginally positive this year. Consider that the iShares China Large-Cap ETF (FXI) and the iShares Europe ETF (IEV) are scoring 2025 returns of 15.8% and 20.8%, respectively. The iShares MSCI Mexico ETF (EWW) and its Canadian counterpart (EWC) are also toting double-digit returns this year. This disparity in performance has unfolded as Trump's trade policy sows uncertainty for investors, companies and the economy, and is driving down the value of the dollar. In the latest development, the U.S. Court of International Trade ruled Wednesday that the president overstepped his authority in issuing his "reciprocal" tariffs in April. .SPX FXI YTD mountain The S & P 500 versus the iShares China Large-Cap ETF in 2025 While the S & P 500 rose in relief on Thursday, gains were held in check as traders feared policy negotiations could now drag out even longer. But there's at least one valuable lesson for investors amid all the confusion: It doesn't hurt to add some international exposure to your portfolio. "U.S. companies have been the cream of the crop over the past decade or so, but conditions change," said Callie Cox, chief market strategist at Ritholtz Wealth Management in Charlotte, N.C. "It's a good challenge of the assumptions investors hold: The U.S.'s leadership isn't always guaranteed, even though on paper it looks like we should be leading against other major regions," she added. That said, investors should proceed carefully as they ramp up global exposure. Accidental concentrations U.S. investors already have an inherent home bias, Cox said – and that's only been exacerbated by the runaway appreciation seen in the likes of tech juggernauts like Nvidia in 2023 and 2024. The downside, however, is that just as those Big Tech positions become too large as shares surge, investors' concentration in U.S. exposure can also become outsized. Financial advisors then must handle the uncomfortable task of getting those investors to diversify away from some of those positions. "We've always felt clients need to have a globally diversified portfolio," said Rafia Hasan, CFP and chief investment officer of Perigon Wealth Management in Chicago. "It's been a tough conversation to have over the past 15 years where, even over the long term, the U.S. was outperforming international markets." The tariff-driven shakeup in the U.S. market was enough to get investors asking about adding international exposure, though, she added. "This economic narrative around the U.S. and the economy – the sentiment had gotten pretty negative," Hasan said. "Now some of that has somewhat dissipated, we will continue to hold that international exposure." Diversification perks While Big Tech has driven returns in the U.S., other industries tend to dominate in international markets. "The biggest sector in developed markets is banks," said Cox. "A dominant tech sector isn't a thing in Europe for many reasons. Sometimes those more value-based sectors in the European Union can step in and help." International exposure can also offer currency diversification benefits. "In theory what should happen is if you have higher inflation in the U.S., the dollar weakens a bit, and having international investments could help offset that," said Roger Aliaga-Diaz, Vanguard's global head of portfolio construction and chief economist for the Americas. How much exposure you'll need to make a difference in your portfolio will depend on your individual circumstances. "If you take some of our portfolios, even in target-date funds, we typically have 60/40 U.S. and non-U.S. exposure," Aliaga-Diaz said, noting that this split applies to the equity sleeve. Investors who have more than 50% of their allocation toward international names run the risk of giving up the diversification of the U.S. market, he noted. But go beyond 70% exposure in U.S. names, and you run the risk of chasing performance, he added. Hasan of Perigon Wealth said that global market cap breaks down along the lines of 65% U.S. and 35% international. "That is a good starting point to think of how much to have in international," she said. "For the U.S. investor, it makes sense to have some home bias relative to the global market." Think broad exposure rather than picking regions Avoid trying to read the tea leaves on which specific nations and international companies may emerge as winners as trade policy evolves. Instead, consider adding a large, broad diversified ETF to your roster. Broad international ETFs with gold ratings from Morningstar include the Vanguard FTSE All-World ex-U.S. ETF (VEU) and the iShares Core MSCI Total International Stock ETF (IXUS) . Both are sporting year-to-date returns of nearly 14%. "There are still too many unannounced policies, and this is where the time is more for diversification, rather than trying to guess the winners and losers," Aliaga-Diaz said.
Bloomberg
28-05-2025
- Business
- Bloomberg
Wall Street Eyes Chinese Stocks Hedges Ahead of Tariff Deadline
Since slumping to a four-month low in April, Chinese equities have rallied nearly 25% as US-China trade tensions eased. According to 22V Research, that's left the stocks vulnerable to yet another selloff in coming weeks and months. The end to a temporary trade truce in August, an upcoming meeting of China's Politburo and the potential passage of the US president's tax-and-spending package all risk reigniting turbulence in the market, 22V's strategists say. That means now is an opportune time to buy protection against any declines in the form of three-month puts on a popular US-listed proxy for the Asian nation's biggest publicly traded companies, the roughly $6 billion iShares China Large-Cap ETF (ticker: FXI).
CNBC
16-05-2025
- Business
- CNBC
Appaloosa's David Tepper trimmed China exposure ahead of trade war
Hedge fund billionaire David Tepper trimmed his exposure to Chinese internet stocks in the first quarter as a trade war between the U.S. and China heated up, while adding a big bearish bet against an exchange-traded fund that rejects fossil fuel investments. Tepper, acting through his Appaloosa Management, had gone all in on China in the wake of Beijing's pledge to boost its economy last fall. Now, he reduced his stakes in Alibaba , PDD and in the first quarter, according to a new 13F regulatory filing. The hedge fund also slashed its holding in iShares China Large-Cap ETF (FXI) and KraneShares CSI China Internet ETF (KWEB) last quarter. In September 2024, Tepper told CNBC he was buying "everything" tied to China because of Beijing's vow to provide massive fiscal support to its economy. Back then, the high-profile investor even said he was raising his usual allocation limit and not hedging his big China bet. Appaloosa's first-quarter moves out of China came before President Donald Trump slapped steep tariffs of more than 100% on China imports into the U.S. in early April, sparking a sell-off in the most prominent Chinese stocks as well as the broader U.S. market. Earlier this week, the U.S. and China agreed to suspend most tariffs on each other's goods for 90 days in a thawing of trade tensions. Also at the end of the first quarter, Tepper owned put options with a notional value of $2.5 billion against the SPDR S & P 500 Fossil Fuel Reserves Free ETF (SPYX), the filing revealed. The filing didn't include the put options' value, strike price or expiration, and Appaloosa could also have exited the position since the end of the first quarter in March. Investors profit from puts when the underlying security falls in prices. The ETF tracks 489 S & P 500 companies that are "fossil fuel free," or companies that do not own fossil fuel reserves. Its top holdings include many of the Magnificent 7 stocks — Microsoft , Nvidia , Apple , Amazon , Alphabet and Tesla — which means the put options could serve as a hedge against a drop in tech stocks. The fund is about flat on the year, but dropped 7.5% in February and March.
Yahoo
20-03-2025
- Business
- Yahoo
FXI's Surge Marks China Stock Dominance in 2025
Asian equity markets, particularly in China, have experienced strong growth in 2025. The iShares China Large-Cap ETF (FXI) exemplifies this trend, delivering a year-to-date return of over 26%. Consequently, investors have reduced allocations to U.S. equities, seeking opportunities in more dynamic markets. China's equity outperformance contrasts with the U.S. stock market, which has faced challenges such as stagflation concerns, escalating trade tensions and debates over the end of U.S. exceptionalism. The newly crowned biggest ETF in the world, the U.S. stock market benchmark Vanguard S&P 500 Index ETF (VOO), is down more than 4% this year. Thus, the FXI vs. VOO return differential is 30%, which marks a stark contrast. Contributing to FXI's performance are its top holdings, including tech giants Alibaba Group (BABA) and Tencent Holdings (TCEHY). Alibaba's shares have surged 70% this year, driven by robust earnings and advancements in artificial intelligence. Similarly, Tencent has gained 30%, reflecting the broader strength of Chinese technology companies. While the sustainability of China's stock resurgence is uncertain, the emerging market's momentum may continue as long as fears of stagflation and a prolonged trade war remain in the minds of investors. FXI is designed to track the performance of the FTSE China 50 Index, comprising 50 of the largest Chinese companies listed on the Hong Kong Stock Exchange. This ETF offers investors exposure to a diversified portfolio of large-cap Chinese firms across various sectors, including technology, financials and telecommunications. By investing in FXI, individuals can gain access to China's economic growth without the complexities of purchasing individual stocks in foreign markets. As of March 17, 2025, FXI's assets under management were a healthy $8.2 billion, and its expense ratio was 0.74%, which is on the high side but typical of other emerging markets funds. Investing in China-focused ETFs like FXI presents several advantages. These funds provide diversified exposure to one of the world's fastest-growing economies, allowing investors to capitalize on sectors experiencing rapid expansion, such as technology and consumer goods. Additionally, China's government has implemented policies to stimulate domestic consumption and support key industries, potentially benefiting companies within these ETFs. However, there are inherent risks, including regulatory uncertainties, geopolitical tensions and differences in corporate governance standards. Moreover, currency fluctuations and potential trade conflicts can introduce volatility to these investments. Looking ahead, the outlook for China ETFs in 2025 appears optimistic. The Chinese government's commitment to boosting consumption and supporting technological innovation is likely to sustain economic growth. Companies like Alibaba and Tencent are well-positioned to benefit from these initiatives, potentially enhancing the performance of ETFs like FXI. However, investors should remain vigilant of external factors such as global economic conditions and international trade relations, which could impact China's markets. For long-term investors, maintaining a diversified portfolio that includes exposure to emerging markets like China or India may offer growth opportunities, but it's essential to balance these with an awareness of the associated | © Copyright 2025 All rights reserved
Yahoo
21-02-2025
- Business
- Yahoo
China ETFs draw bullish options bets on AI play and eased tariff fears
By Saqib Iqbal Ahmed NEW YORK (Reuters) - U.S.-listed exchange-traded funds focused on China have drawn bullish options flows as the emergence of artificial intelligence startup DeepSeek brightens the outlook for Chinese tech shares, and tariff-related news seemed less threatening than before. Traders have been loading up in recent weeks on bullish options on the KraneShares CSI China Internet ETF and the iShares Trust-China Large-Cap ETF, the two largest Chinese equity ETFs with combined assets of about $15 billion, options data showed. One-month average daily trading volume in KraneShares CSI China Internet ETF call options, typically bought to position for upside, outnumbers defensive put options nearly 5-to-1, close to the most bullish this measure has been in about four years, Trade Alert data showed. Options on large-cap focused FXI have also been in high demand with skew - a measure of relative demand for calls and puts - showing traders' preference for call options, recent Cboe data showed. "There's been a lot of interest in China upside. That's definitely been a big theme," said Alex Kosoglyadov, managing director for equity derivatives at Nomura. Chinese stocks have rallied in recent weeks as investors rush into AI-related stocks, betting that DeepSeek's advance will lead to a boom in the sector and give China the upper hand in an intensifying Sino-U.S. technology war. FXI shares have risen about 12% and KWEB shares are up 14% since Chinese startup DeepSeek's late January rollout of its free AI assistant it said uses cheaper chips and less data, seemingly challenging the United States as an AI superpower. "People are definitely growing optimistic about China's potential to produce an AI ecosystem that's competitive with what the U.S. has been building out," Kosoglyadov said, noting bullish flows into the FXI and KWEB ETFs. Some of the options optimism may also have to do with tariff-related relief. U.S. President Donald Trump had promised 60% tariffs on Chinese imports before he was elected, but revised that to 10% after taking office. Global hedge funds keen to navigate U.S.-China trade tensions are amassing Chinese stock bets in the hopes of making huge profits if Beijing forms a pact with Trump, or if the rest of the world and China unite against him. "I think people are ultimately optimistic because you've had a much softer tone on China from the Trump administration, if you compare what we heard during the campaign," Kosoglyadov said.
