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iShares China Large-Cap ETF

FXI:NYSE Arca

equity ETF | passive | iShares | Tracks FTSE Russell

Market Price

US$39.45 (26 Jan 2026)

+28.93% (YoY)

NAV

US$39.43

+0.05% Premium

Yield

2.40%

+37.65% (YoY)

Expense Ratio

73.00%

-5% vs Avg: 77.00%

Box Set (ETF)

⚡ Executive Summary

📊 The Bottom Line

This ETF tracks the FTSE China 50 Index, offering concentrated exposure to 50 of the largest Chinese companies listed on the Hong Kong Stock Exchange. It provides a straightforward way to invest in China's large-cap equity market. The bull case projects the NAV could reach US$47.34 (+20%), while the bear case suggests a downside to US$33.53 (-15%) over the next 12-18 months.

⚖️ Risk vs Reward

The underlying Chinese large-cap holdings trade at a modest aggregate P/E of 12.98x, which is relatively attractive compared to broader developed markets, yet faces significant geopolitical and regulatory uncertainties. The sector has seen strong performance in 2024 and 2025, but future gains are contingent on sustained economic recovery and policy clarity from Beijing. While there's upside potential from a recovering consumer and technology sector, the concentrated nature of the ETF's holdings amplifies company-specific and country-specific risks.

🚀 Why FXI Could Soar

• Further easing of regulatory pressures on technology and internet sectors could unlock significant growth and valuation expansion for key holdings.
• A stronger-than-expected rebound in Chinese domestic consumption and overall economic growth would directly boost corporate earnings and investor confidence.
• Increased foreign institutional investor allocation to China as market sentiment improves and diversification strategies broaden could drive inflows and price appreciation.

⚠️ What Could Go Wrong

• Escalating geopolitical tensions and trade conflicts between China and major global economies could lead to capital outflows and dampen market sentiment.
• Slower-than-anticipated economic recovery or new regulatory crackdowns on key industries could severely impact corporate profitability and investor confidence.
• Increased competition in the technology and e-commerce sectors, coupled with a challenging consumer environment, could pressure margins for the ETF's largest holdings.

🏢 Fund Overview

What Are You Actually Buying

The iShares China Large-Cap ETF provides concentrated exposure to 50 of the largest and most liquid Chinese companies that primarily trade on the Hong Kong Stock Exchange. These companies include prominent names in financials, consumer discretionary, and communication services.
These large-capitalization Chinese equities are often considered bellwethers of China's economic health, reflecting trends in consumer spending, industrial development, and financial stability. They typically represent established market leaders within their respective industries.
Unlike broader China ETFs that might include mainland A-shares or US-listed ADRs, FXI focuses on H-shares, P-chips, and Red Chips, offering a distinct segment of the Chinese equity market to international investors.

Market Dynamics & Outlook

The Chinese equity market is currently navigating a complex environment, with policy support aimed at economic stabilization contrasting with ongoing property sector challenges and mixed consumer confidence.
Regulatory shifts, particularly in the technology and education sectors, have previously introduced volatility, but recent signals from Beijing suggest a more supportive stance towards economic growth.
The outlook remains cautiously optimistic, with potential tailwinds from targeted stimulus measures and a gradual recovery in global trade, though geopolitical risks remain a persistent factor.

🎯 Why This Matters

Understanding China's large-cap equity market is crucial as it offers exposure to a significant portion of the global economy, driven by domestic consumption and technological advancements. The ETF's concentrated portfolio means performance is heavily influenced by the health and regulatory environment of a few major players, making a deep dive into underlying fundamentals and market dynamics essential for investors.

📈 Valuation & Analysis

Historical Performance

YTD

+0.03%

+29.01%

Yearly Growth (3Y)

+13.50%

Yearly Growth (5Y)

-1.67%

Yearly Growth (10Y)

+3.27%

Yearly Growth (Since Inception)

+5.97%

Current Valuation

The iShares China Large-Cap ETF's underlying holdings currently trade at an aggregate price-to-earnings (P/E) ratio of 12.98x and a price-to-book (P/B) ratio of 1.66x. The weighted average dividend yield stands at 2.34%. These valuation metrics suggest that Chinese large-cap equities are trading at a discount compared to many developed market counterparts, which often command P/E ratios in the high teens or twenties. Historically, Chinese equities have often traded at lower multiples due to various factors including regulatory uncertainty, slower economic growth perceptions, and corporate governance concerns. The current valuation levels are near the lower end of their historical range, suggesting potential for multiple expansion if market confidence improves. However, investors must weigh the attractive valuation against the inherent risks associated with investing in a concentrated portfolio within an emerging market economy.

The Bull Case - Upside to

Robust Economic Rebound and Policy Support

Medium Probability

If China's GDP growth exceeds expectations, reaching 5.5% in 2026, driven by effective stimulus and consumption recovery, the ETF's NAV could see a 15-20% boost as corporate earnings improve and investor sentiment strengthens.

Eased Geopolitical Tensions and Regulatory Clarity

Medium Probability

A de-escalation of US-China trade tensions and clear, supportive regulatory frameworks for major tech and consumer firms could lead to a 10-15% multiple expansion for FXI's holdings, adding US$4-US$6 to the NAV.

Stronger-Than-Expected Earnings from Mega-Caps

Medium Probability

If key holdings like Alibaba and Tencent deliver earnings growth exceeding 20% annually due to innovation and market penetration, the ETF's NAV could climb by 12-18%, translating to a US$5-US$7 increase.

The Bear Case - Downside to

Protracted Economic Slowdown and Property Crisis

Medium Probability

A prolonged slowdown in China's economy, exacerbated by an unresolved property crisis, could trigger a 20-25% decline in corporate earnings for FXI's constituents, leading to a 15-20% drop in NAV (US$6-US$8).

Renewed Regulatory Crackdowns and Geopolitical Risks

Medium Probability

Further, unanticipated regulatory actions against internet or financial giants, coupled with intensified geopolitical friction, could compress valuations by 10-15%, reducing the ETF's NAV by US$4-US$6.

Weak Global Demand and Export Headwinds

Low Probability

A significant downturn in global demand could hit China's export-oriented sectors and supply chains, potentially leading to a 5-10% contraction in corporate revenues for FXI holdings, impacting NAV by US$2-US$4.

Risk/Reward Assessment

The iShares China Large-Cap ETF presents a compelling risk-reward profile for investors seeking exposure to China's dominant enterprises, albeit with notable risks. The bull case is anchored in a potential rebound of the Chinese economy, further regulatory easing, and robust earnings from its technology and consumer discretionary giants. Should these catalysts materialize, the attractive valuations of the underlying holdings could lead to significant upside. Conversely, the bear case highlights persistent challenges such as a prolonged economic slowdown, especially within the property sector, and the ever-present specter of regulatory interventions or escalating geopolitical tensions. For investors with a long-term horizon and a higher tolerance for volatility, the current valuation might present an opportunity to gain exposure to companies poised for growth in a recovering market. However, the concentrated nature of FXI's portfolio means that the performance is highly susceptible to the fortunes of its top holdings and the broader Chinese macroeconomic and political landscape. Careful consideration of these macro-level factors, rather than just company-specific fundamentals, is paramount when assessing the overall risk versus reward.

Peer Comparison

• FXI provides targeted exposure to 50 large-cap Chinese companies traded in Hong Kong, offering a distinct focus compared to broader China ETFs that may include A-shares or a wider range of market caps. • While FXI's expense ratio of 0.73% is slightly higher than some broader China ETFs, it offers deep liquidity and a long track record, making it a reliable choice for direct large-cap exposure. • FXI has demonstrated competitive performance over various periods, especially in strong Chinese market upturns, although its concentrated nature can lead to higher volatility compared to more diversified peers. • The ETF's tight tracking of the FTSE China 50 Index ensures investors get the intended market-cap-weighted exposure to China's most influential companies without significant tracking error.

Fund	Expense Ratio	AUM (B)	1Y Return	3Y Return	5Y Return	Yield
iShares China Large-Cap ETF (FXI) ⭐	73.00%	US$6.4B	29.01%	13.50%	-1.67%	2.34%
iShares MSCI China ETF (MCHI)	59.00%	US$8.1B	31.07%	11.23%	-3.72%	2.10%
Invesco Golden Dragon China ETF (PGJ)	70.00%	US$0.5B	25.00%	10.00%	-2.50%	1.50%

🎯 Why This Matters

The valuation and peer comparison highlight FXI's concentrated, large-cap Hong Kong-listed China exposure, which can offer significant upside during market rallies but also carries higher single-country and company-specific risks. Investors should consider their conviction in China's largest enterprises and their tolerance for volatility when allocating to this ETF.

📊 Appendix

Top 10 Holdings (80+ of ETF Value)

#	Ticker	Logo	Name	Sector	Weight
1	9988	A	Alibaba Group Holding Ltd	Consumer Discretionary	9.7%
2	0700	T	Tencent Holdings Ltd	Communication Services	8.6%
3	0939	C	China Construction Bank Corp H	Financials	6.7%
4	1810	X	Xiaomi Corp	Information Technology	6.3%
5	3690	M	Meituan	Consumer Discretionary	5.2%
6	1398	I	Industrial and Commercial Bank of China	Financials	4.4%
7	2318	P	Ping An Insurance (Group) Co of China	Financials	4.2%
8	1211	B	BYD Ltd H	Consumer Discretionary	3.7%
9	9999	N	Netease Inc	Communication Services	3.7%
10	9888	B	Baidu Class A Inc	Communication Services	3.6%

Fund Mechanics

How It Works

The iShares China Large-Cap ETF (FXI) is designed to track the investment results of the FTSE China 50 Index (Net), a market-capitalization-weighted index composed of the 50 largest Chinese equities that trade on the Hong Kong Stock Exchange. The fund primarily invests in H-shares, P-chips, and Red Chips, offering a focused exposure to the most influential companies within China's equity market. The index methodology ensures liquidity by screening stocks and includes capping rules to prevent overconcentration, with individual stock weights capped at 9% and company weights at 38%. The index is reconstituted and rebalanced quarterly to maintain its targeted exposure to China's large-cap segment. This passive management approach aims to provide investors with diversified access to a specific segment of the Chinese economy with minimal active management bias.

Holdings Breakdown

Number of Holdings

Top 10 Concentration

5611.0%

Top 20 Concentration

7500.0%

Turnover Rate

400%

Category	Weight	Description
Financials	30.3%	Exposure to China's banking and insurance giants.
Consumer Discretionary	28.4%	Investments in e-commerce and automotive sectors driven by Chinese consumer spending.
Communication Services	18.8%	Holdings in internet services and entertainment companies.
Information Technology	6.5%	Exposure to hardware and technology innovation firms.
Basic Materials	4.5%	Companies involved in industrial metals and mining.
Energy	4.5%	Firms in oil and gas exploration and production.
Healthcare	2.3%	Pharmaceutical and healthcare service providers.
Industrials	1.7%	Diversified industrials including construction and machinery.
Consumer Defensive	0.9%	Stable consumer goods companies.
Real Estate	0.9%	Property development and management companies.
Cash and/or Derivatives	0.6%	Liquid assets and hedging instruments.
Utilities	0.3%	Public utility companies.

Cost Efficiency

Expense Ratio

73.00%

Median Bid-Ask Spread

3.000%

Metric	1 Year	3 Year	5 Year
Tracking Error	15.00%	20.00%	30.00%
Tracking Difference	-10.00%	-56.00%	-76.00%

Expense Ratio History

Year	Expense Ratio
2025	73.00%
2024	73.00%
2023	73.00%

Performance History

Year	ETF Return	Benchmark Return	Tracking Diff	Volatility	Max Drawdown	Sharpe Ratio
2021	-21.04%	-19.99%	-1.05%	25.00%	-30.00%	-0.50
2022	-20.40%	-19.54%	-0.86%	24.00%	-28.00%	-0.45
2023	-12.87%	-12.92%	0.05%	22.00%	-20.00%	-0.30
2024	30.10%	31.98%	-1.88%	26.00%	-10.00%	1.00
2025	29.01%	29.11%	-0.10%	23.00%	-8.00%	1.20

Annualized Return Since Inception

5.97%

Detailed Peer Comparison

Ticker	Name	Issuer	Exp Ratio	AUM (B)	1Y	3Y	5Y	Yield	StdDev 3Y	Sharpe 3Y	Spread
FXI ⭐	iShares China Large-Cap ETF	iShares	73.00%	US$6.4B	29.0%	13.5%	-1.7%	2.34%	23.05%	0.44	3.000%
MCHI	iShares MSCI China ETF	iShares	59.00%	US$8.1B	31.1%	11.2%	-3.7%	2.10%	23.74%	0.35	2.000%
PGJ	Invesco Golden Dragon China ETF	Invesco	70.00%	US$0.5B	25.0%	10.0%	-2.5%	1.50%	25.00%	0.20	5.000%
Category Average			77.00%	—	30.4%	7.9%	-2.8%	2.45%	—	0.21	—

Risk Metrics

Beta

0.57

Alpha

-1.31

R-Squared

26.05

Standard Deviation

1 Year	3 Years	5 Years	10 Years
24.00%	23.05%	22.00%	20.00%

Sharpe Ratio

1Y	3Y	5Y	10Y
1.69	0.44	-0.05	0.20

Sortino Ratio

3 Years	5 Years
2.28	0.50

Maximum Drawdown

1 Year	3 Years	5 Years	Since Inception
-10.00%	-15.00%	-25.00%	-35.53%

Upside Capture

11700.0%

Downside Capture

19200.0%

Correlations

S&P 500

0.70

Aggregate Bond

0.30

MSCI ACWI

0.75

Gold

0.10

Liquidity & Trading

Volume

Avg Daily Shares

29,835,890

Avg Daily Dollar Volume

US$1176.0M

Trend

increasing

Bid-Ask Spread

Metric	Value
Median (Percent)	3.000%
Median (Dollar)	US$0.01
During Hours	3.000%
At Close	3.000%
Volatility	low

Premium/Discount to NAV

Metric	Value
Current	5.00%
30-Day Average	2.00%
1-Year Average	5.00%
Standard Deviation	10.00%
Max Premium (1Y)	50.00%
Max Discount (1Y)	-50.00%

Creation/Redemption Activity

Trend

stable

Net Flows

Period	Net Flow

⚠️ Disclaimer: This ETF research report is for informational and educational purposes only. It does not constitute investment advice, a recommendation, or an offer to buy or sell securities. EC² Invest is not a registered investment advisor. All data is sourced from public sources and may contain errors. Past performance does not guarantee future results. ETF investing involves risk, including possible loss of principal. Always conduct your own research and consult with a qualified financial professional before making investment decisions.