Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect companies in China to thrive as its massive population grows even larger, and you'd like to focus on companies that serve that population directly, the Global X China Consumer ETF
ETFs often sport lower expense ratios than their mutual fund cousins. The China ETF's expense ratio -- its annual fee -- is 0.65%, which is much lower than most competing mutual funds, but a bit higher than many ETFs. One of the attractive things about the fund is its very low turnover rate of 4%, which can help keep its costs down, since the fund isn't frantically and frequently rejiggering its holdings as many do.
I would like to tell you that this ETF has performed very well, but it's actually too soon to tell. It beat the benchmark MSCI EAFE Index of developed international markets in 2010 but is lagging it so far this year; however, the fund is very young. As with most investments, of course, we can't expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.
Its youth also contributes to the fund being rather small, with less than $150 million in assets. It's often smart to give such funds a chance to grow bigger and therefore more stable before investing. Still, learn more about the fund and consider adding it to your watch list. Or invest just a little to begin with.
What's in it?
Several of this ETF's components made strong contributions to its performance over the past year. New Oriental Education & Technology
Other companies didn't add as much to the ETF's returns last year, but could have an effect in years to come. Home Inns & Hotels Management
Chinese advertising giant Focus Media
Longtime Fool contributor Selena Maranjian owns shares of Ctrip.com, but she holds no other position in any company mentioned. Click here to see her holdings and a short bio. The Motley Fool owns shares of Ctrip.com. Motley Fool newsletter services have recommended buying shares of Ctrip.com and New Oriental Education & Technology Group. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.