Welcome back to ETFs Around the World, the series that considers some of the most interesting regional ETFs on the market today. As global markets continue to evolve, investors have an opportunity to rethink their strategies and tap into high-potential growth areas outside of their home country.  

In previous chapters of this mini-series, we have taken a close look at ETFs that focus on Japan, India, Europe, and global equities, comparing two top-performing funds from each of these regions or groups.   

This series isn’t about picking winners – it's about exploring new angles and considering how regional dynamics could shape your ETF portfolio. Whether you're already familiar with these markets or are looking for fresh insights, we’ll help you navigate the evolving landscape of international ETFs with a new lens.   

Today, we’re visiting China – the world’s second largest economy – specifically, iShares China Large-Cap ETF and the VanEck FTSE China A50 ETF.  

It is important to always do your own research before making decisions to invest.     

This article was produced 17 March 2025. 

Key takeaways: 

• Both the iShares China Large-Cap ETF and the VanEck FTSE China A50 ETF target 50 of the largest Chinese equities, listed on Hong Kong and mainland China markets respectively.  

• The net assets that are held by iShares within the IZZ ETF are significantly larger than those under management by VanEck for CETF. However, CETF features a more even spread of capital across individual holdings. 

• The iShares China Large-Cap ETF currently holds more assets in Consumer Discretionary and Communication Services stocks than the VanEck FTSE China A50 ETF, which instead holds greater assets in Industrials and Consumer Staples shares. 

• Since inception, IZZ has outperformed CETF, in addition to the last one and three-year periods, albeit the five-year return for CETF is higher than its more established rival. 

• iShares targets semi-annual distributions for IZZ, whereas VanEck targets an annual distribution for CETF. 

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Home to the world’s second largest economy, underpinned by a rapidly growing middle class, China has long been synonymous with an abundance of investment opportunities tailored towards growth. 

In 2025, the Chinese government set its annual GDP growth target at around 5%, while also raising its fiscal deficit target to 4%. Meanwhile, the nation is home to leading global companies spanning the Information Technology, Financials, and Consumer Discretionary sectors. 

Today, Australian investors can choose from a range of ETFs to tap into the growth thematic tied to Chinese equities. This includes the iShares China Large-Cap ETF (ASX: IZZ) and the VanEck FTSE China A50 ETF (ASX: CETF), which are the subject of this iteration of our ETFs Around the World series. 

Here are the key characteristics of the two funds. 

Fund Objective 

As the first fund in focus, the iShares China Large-Cap ETF aims to provide investors with the performance of the FTSE China 50 Index, before fees and expenses.  

According to the fund manager, this index tracks the performance of “50 of the largest and most liquid Chinese companies which trade on the Hong Kong Stock Exchange”. 

With a similar but slightly different focus, the VanEck FTSE China A50 ETF measures the performance of a diversified portfolio comprising the 50 largest companies, by full market capitalisation, in the mainland Chinese market.  

The fund is designed to provide investment returns, before fees and other costs, which replicate the returns of the FTSE China A50 Net Tax AUD Index. 

A key distinction between the two products is that CETF invests in China A-shares, which are RMB-denominated shares of China-based companies traded on the Shanghai and Shenzhen stock exchanges. On the other hand, IZZ invests in H-shares, being securities of companies incorporated in mainland China, but trading on the HKEX. 

Fund Profiles 

According to the latest ASX Investment Products monthly update, dated February 2025, iShares’ IZZ is the more popular of the two funds across the broader investment community. 

At the end of February 2025, the iShares China Large-Cap ETF boasted $379.7 million in funds under management (FUM). This was an improvement of $54.9 million over the prior month. Approximately half of IZZ’s FUM growth was attributable to net inflows. 

On the other hand, the VanEck FTSE China A50 ETF finished the month with $36.1 million in FUM, including $0.5 million in growth through February, with no change in net inflows. 

While IZZ holds significantly more assets than CETF, it should be noted that the former was admitted to the ASX in November 2007, whereas the latter started trading in June 2015. 

Trading activity followed a similar pattern to last month’s growth in net assets. Across all ASX trading (broker) participants there were 7,305 trades in IZZ last month, compared with just 538 for CETF. Transacted values were $82.9 million and $5.1 million respectively, leading to average trade sizes of approximately $11,348 and $9,480. Monthly liquidity for IZZ was 21.83%, and for CETF it was 14.05%. 

Fund Holdings 

Although both funds seek to track 50 of the largest Chinese companies, because of the distinction with which the two funds focus on the Hong Kong and mainland Chinese markets, there are notable distinctions in holdings. 

Furthermore, a greater concentration of assets is invested in the top 10 largest holdings in IZZ, being 62.35%, as opposed to 47.85% for CETF. Both funds hold a total of 50 unique securities, plus cash and/or derivatives products. 

^ = as at March 14, 2025 - rounded to two decimal places 

When it comes to sector exposure, the two funds can be summarised as per the below table. IZZ is largely invested in shares from the Consumer Discretionary, Financials, and Communication Services sectors.  

By way of comparison, CETF has little to no exposure to Consumer Discretionary and Communication Services shares, instead investing far more capital into Industrials, Consumer Staples, and Utilities, where IZZ currently offers little exposure. 

^ = as at March 13, 2025 - rounded to one decimal place 

* = as at February 28, 2025 - rounded to one decimal place 

Performance and Distributions 

Over the one, three, and five-year periods leading up to February 28, 2025, the iShares China Large-Cap ETF returned an average of 58.08% (one),7.81% (three) per annum, and then a loss of -0.26% per annum (five). Since inception, the fund’s average total return has been 6.30% per annum. 

Based on the same period, the performance of the VanEck FTSE China A50 ETF yielded a total return of 18.62% over the last year, -1.33% per annum over the last three years, and 1.14% over the last five years. Since inception, the ETF has delivered an average total return of 0.05% per annum. 

As far as distributions, IZZ aims to pay semi-annual distributions to unitholders of the fund. In comparison, CETF targets one distribution each year for unitholders.  

Keep in mind, the amount and timing of distributions will vary from period to period, and there may even be periods where no distributions are made. 

Past performance is not an indicator of future performance, and it is important to undertake your own research and analysis. 

Fees 

One commonality between the iShares China Large-Cap ETF and the VanEck FTSE China A50 ETF is that they both charge the same management fee of 0.60% per annum. 

Management fees are calculated in relation to the net asset value (NAV) of each fund daily, and prospective investors should note that other fees may apply.  

Please refer to the relevant Product Disclosure Statements for up-to-date details on costs and expenses, which may be deducted from the fund’s assets as and when they are incurred.  

Summary 

Both the iShares China Large-Cap ETF and the VanEck FTSE China A50 ETF offer exposure to 50 of the largest Chinese companies. The former, which has been listed for an additional eight years, is the significantly larger of the two funds, with its net assets nearly seven times those of its smaller peer.  

Since IZZ and CETF invest in equities listed on different exchanges — the Hong Kong and mainland China markets respectively — there are differences to their fund profiles. At the time of writing, assets in IZZ are more heavily concentrated among the fund’s top 10 holdings, while CETF favours Industrials and Consumer Staples shares over Consumer Discretionary and Communication Services. 

With respect to average returns, IZZ has outperformed over the last one and three-year periods, and since inception, but CETF edges the former for returns over the last five years. Finally, although each fund charges a management fee of 0.60% per annum, the pair offer different distribution policies, with iShares nominating semi-annual distributions for IZZ, and VanEck targeting an annual distribution for CETF. 

For more information, you can read about the iShares China Large-Cap ETF here, and the VanEck FTSE China A50 ETF here. Before investing in any ETFs, you should consult the respective product’s Product Disclosure Statement, which will be available on the fund’s website.