Want Alibaba, Tencent, Baidu in your portfolio? 5 China ETFs Indian investors should know about

It is always a good idea to extend the diversification of your equity portfolio geographically. And getting into China — the world’s second-largest economy — can be particularly appealing. Here’s a look at what are China-focused ETFs, whether they are worth investing in and how much you should hold in your protfolio.

What are China ETFs?

China ETFs are funds that track publicly listed Chinese companies. The issuing company purchases the underlying asset (such as stocks, bonds or currency), and investors purchase shares in the fund. As the underlying assets rise and fall, so does the value of your fund investment.

However, investing in China ETFs carries risks, such as trade tensions with the U.S. and other geopolitical factors.

How Indian investors can invest?

For Indian investors investing directly in Chinese companies is extremely complicated. Instead of trying to pick winners, a more convenient approach is to gain exposure through US-listed Exchange-Traded Funds (ETFs).

These ETFs invest in a diversified basket of Chinese companies across sectors such as artificial intelligence, semiconductors, robotics and advanced manufacturing, allowing nvestors to participate in China’s long-term innovation story while reducing the stock-specific risks

Here’s a list of some AI, tech and China-focused ETFs that include exposure to companies in AI, semiconductors, robotics, and tech innovation:

• KraneShares CSI China Internet ETF (KWEB): Tracks major Chinese internet and tech giants like Alibaba, Tencent, Baidu and Meituan. While not pure AI, many constituents are heavy AI adopters and cloud leaders.
• iShares MSCI China ETF (MCHI): Broad exposure to large and mid-cap Chinese companies across sectors, including technology, semiconductors and innovation-driven firms. Acts as a diversified China core holding.
• Invesco Golden Dragon China ETF (PGJ): Focuses on US-listed Chinese companies, including several technology and platform businesses that are actively investing in AI and digital infrastructure.
• KraneShares Hang Seng TECH ETF (KTEC): Targets the Hang Seng TECH Index, which includes Chinese technology and innovation leaders across e-commerce, cloud, AI, EV tech and semiconductors.
• SPDR S&P China ETF (GXC): A broad China market ETF with meaningful allocation to technology and communication services, offering indirect participation in AI and semiconductor growth.

How much should you hold in your portfolio?

“China is concentrated on manufacturing. Its the factory of the world, on the other hand, America focuses more on valuation. So China is always a good bet, since I believe US Markets could see some correction, China immediately becomes lucrative to stay invested in,” Sidharth Sogani is CEO of Blue Aster Capital (Bahrain) and CREBACO Global

A 10 to 15 % exposure on Asian markets is good for institutional investors. iShares MSCI China ETF andKraneShares CSI China Internet ETF would be my suggestion, he concludes