SPDR Standard and Poor's China ETF

published 1 June 2012

As the world’s markets bob and weave, many investors are keeping a watchful eye on China and its decelerating economy. A hard landing could shake their newfound confidence; a well-managed slowdown could set their minds at ease.

So why all the hand-wringing about China’s slowing growth? In the first quarter of 2012, the country’s economy expanded 8.1%. That’s slower than the 9.3% pace of 2011, but it tops the growth rate in all developed nations (and most emerging ones, too) over the same period. With the government aiming to improve the lot of hundreds of millions of people still living a third-world lifestyle, China has huge potential for growth.

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Rather than owning all 416 securities in the index, however, SPDR S&P China ETF owns just 170. State Street Global Advisors, sponsor of the SPDR ETFs, has found that the cost of copying some of the more exotic indexes precisely can “erode returns,” particularly in a fund’s early days, says State Street’s Kevin Quigg. So far, the SPDR ETF has done a good job of tracking its bogey. Over the past five years, it lagged the index by an average of 0.17 percentage point per year.

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Nellie joined Kiplinger in August 2011 after a seven-year stint in Hong Kong. There, she worked for the Wall Street Journal Asia, where as lifestyle editor, she launched and edited Scene Asia, an online guide to food, wine, entertainment and the arts in Asia. Prior to that, she was an editor at Weekend Journal, the Friday lifestyle section of the Wall Street Journal Asia. Kiplinger isn't Nellie's first foray into personal finance: She has also worked at SmartMoney (rising from fact-checker to senior writer), and she was a senior editor at Money.