Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, the iShares FTSE China 25 Index Fund (NYSE: FXI) has received a distressing two-star ranking.

With that in mind, let's take a closer look at iShares FTSE China and see what CAPS investors are saying about the ETF right now.

iShares FTSE China facts

Inception

October 2004

ETF Total Net Assets

$5.31 billion

Investment Approach

Seeks investment results that correspond generally to the price and yield performance of the FTSE China 25 Index

Expense Ratio

0.72%

1-Year / 3-Year / 5-Year Annualized Returns

(27.8%) / 5.1% / 4.4%

Top Holdings with High CAPS Rating (4 or 5 Stars) and Portfolio Weight

China Mobile (NYSE: CHL) (10.5%)

CNOOC (NYSE: CEO) (7.6%)

PetroChina (NYSE: PTR) (6.6%)

Alternatives

SPDR S&P China (NYSE: GXC)

iShares MSCI Hong Kong (NYSE: EWH)

Sources: Morningstar and Motley Fool CAPS.

On CAPS, 9% of the 1,609 members who have rated iShares FTSE China believe the ETF will underperform the S&P 500 going forward. These bears include pchop123 and All-Star JakilaTheHun, who is ranked in the top 0.1% of our community.

Just last week, pchop123 cautioned Fools about betting on the ETF: "China's 'great wall' or you might say 'great bubble' is being [breached] as we communicate."

iShares FTSE China, in particular, sports an expense ratio of 0.72%. That's higher than other China region ETF alternatives like SPDR S&P China (0.59%) and iShares MSCI Hong Kong (0.53%).

CAPS All-Star JakilaTheHun elaborates on the bear case:

China is in a bubble right now, driven primarily by the Chinese government. The major contributors to this bubble have been the Dollar peg in China, coupled with regulatory limitations on investments inside the PRC. Add a massive stimulus package back in '08 to these already distortative measures, and you get a giant real estate and commodities bubble. ...

Once this bubble crashes, perception about the risks of emerging markets is going to shift again. ... The US has its issues and risks, but its vastly safer to invest in stable markets like here than it is in many emerging markets, with controlled markets, lesser legal protections, and limited political freedoms. These markets can provide high-upside opportunities, particularly when they begin to liberalize and reap the benefits of trade; but centrally managed economies are very rarely all that efficient and create much larger bubbles than we see even here in the US. ...

Where the US had an advantage over China is allowing its markets to operate freely more often than not. China's state-imposed controls create massive distortions that are bound to collapse eventually.

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