FCA vs MCHI

FCACFirst Trust China AlphaDEX Fund

MCHIAiShares MSCI China ETF

In short

FCA Most China ETFs just hold the market. FCA screens the Nasdaq China universe on growth and value factors, keeping roughly 50 names weighted by rank rather than size. A quant twist on China exposure, running since 2011.

MCHI The default one-ticker way to own China. MCHI has tracked the MSCI China Index since 2011, holding roughly 600 stocks open to international investors, and it stays actively traded.

Stated mandate

FCA The fund seeks to generally match, before fees and expenses, the price and yield performance of the Nasdaq AlphaDEX China Index. It normally invests at least 90% of net assets in securities comprising that index and uses an indexing approach.

MCHI The fund seeks to track an index of Chinese equities available to international investors.

Why people hold it

• FCA Not a cap-weighted mirror. The AlphaDEX screen ranks the Nasdaq China universe on growth and value factors, then selects and weights the survivors by rank, so the biggest listing isn't automatically the biggest position.firsttrust.ca
• Concentrated on purpose: roughly 50 stocks instead of the hundreds in a broad China index. Every holding has to earn its slot through the screen.
• Launched in 2011, which makes it one of the longer-tenured China funds on the shelf. The rules have been through multiple China booms and busts, not just a back-test.
• Rules, not hunches. It normally keeps at least 90% of net assets in its Nasdaq index constituents and uses a straight indexing approach, so nobody is trading headlines for you.

• MCHI One ticker, roughly 600 Chinese stocks. Instead of picking among share classes and listings, you get the MSCI China Index (Net) in a single line item.ishares.com
• 0.59% expense ratio, below the middle of the single-country China pack, and the fund has hewed closely to its stated index mandate.
• Running since 2011 and now a multi-billion-dollar fund that trades actively, which is why it turns up as the reference China holding in so many portfolios.
• One of the stronger implementations in its peer group on tradability and staying power, both scored in the top tier of the China cohort.

Worth knowing

• FCA The screen costs money: 0.80% a year, versus a fraction of that at plain cap-weighted China trackers such as FLCH (0.19%) and CXSE (0.32%).
• Small asset base and thin trading volume. Bid-ask spreads and order size matter more here than at the category giants, and premiums or discounts can widen.
• Factor weighting means returns can drift well away from the headline China indexes in either direction. That divergence is the point, and it cuts both ways.

• MCHI Cheaper broad-China options exist: FLCH charges 0.19% and JPMorgan's active JCHI 0.15%. You are paying up for MCHI's depth and liquidity.
• Single-country equity risk, undiluted. Chinese regulation, currency and policy swings hit the whole basket at once, and the index leans heavily on its biggest names.
• Distributions come once or twice a year, not monthly, so cash flow arrives in lumps.

Full FCA profile⁠

Full MCHI profile⁠