A couple of months ago I wrote an article about the iShares FTSE/Xinhua China 25 Index Fund (NYSE:FXI) and Hutchison Telecom (NYSE:HTX). The thrust of the article was that we will see more and more ways to invest in China, and that one thing to look out for is an oversupply of potential investments.

Well, since that article there have been more IPOs, the addition of an optionable index or two, and, very recently, a new ETF: the PowerShares Golden Dragon Halter USX China Portfolio (AMEX:PGJ), which I'll just call Dragon.

Dragon has 38 stocks, all of which trade on U.S. markets. According to the PowerShares website, Dragon is weighted 30% in energy -- including Petrochina (NYSE:PTR) at 11.9% of the fund, and CNOOC (NYSE:CEO) at 11% -- and 25% in telecom, with China Mobile Hong Kong (NYSE:CHL) constituting 11.5% of the fund. Aside from those three companies, though, the fund's other holdings are low-single-digit percentages of its total.

Investors may be wondering about what seem to be infrastructure-heavy constitutions of both the Dragon fund and the iShares FTSE/Xinhua index fund (which has 20% in energy and 21% in telecom). The Standard & Poor's 500, for comparison, has 7% in energy and 3% in telecom.

But China is an emerging market. And a big factor in its growth will be the build-out and up of infrastructure and the resources needed to maintain that growth. The weightings in energy, telecom, and materials should capture that effect. What may be missing is a high dividend yield, although at the end of the day, investors would likely forgo a high dividend in favor of higher growth.

Since the fund is brand new, there is no dividend info. After doing a back-of-the-envelope calculation, it looks like the yield may be in the neighborhood of 1.8%. Compare that with the 5.3% yield you could get from Petrochina or the 3.9% dividend from Huaneng Power (NYSE:HNP). In stable economies, high dividends almost universally signal a dearth of growth opportunities, but emerging-market companies sometimes offer high dividends to compensate investors for the risk they are taking.

So is there reason to own this ETF, or does it make more sense to think that China will lag behind the U.S. in 2005? If you want to capture the China effect, good or bad, clearly Dragon is a good choice in my opinion. In fact, it may be a better choice than the iShares FTSE/Xinhua China 25 because there are more holdings and all the stocks it currently holds are ADRs, meaning getting information on the holdings is easier than with the iShares fund.

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Fool contributor Roger Nusbaum is an investment manager and wildland firefighter in Prescott, Ariz. At press time neither he nor his clients owned any of the stocks mentioned.