ETF Showdown: Enter The Dragon

There are no shortage of ETFs offering exposure to China. In fact, there are over 100 funds offering Chinese exposure, making China the most represented of the BRIC quartet in the ETF universe. While there may a lot of China-specific ETFs out there, one fund is still the boss of the block and that is the iShares FTSE China 25 Index Fund FXI, which is just a couple of months shy of its eighth birthday. In that time, FXI has become the dominant and most liquid China-specific ETF, hauling in nearly $6 billion in assets. That hasn't keep other ETF issuers from trying to encroach on FXI's territory. Some have with varying degrees of success and one of FXI's newer potential rivals is the First Trust AlphaDEX China Fund FCA, which rolled out in April and squares off against FXI in this week's ETF Showdown. While FXI has the advantage of being the most popular China-specific ETF, that doesn't make it the best China-specific. In fact, a weight of over 51% to financials is and has been troublesome for some time now. FCA, with just about $2.4 million in AUM, holds 51 stocks, nearly twice as many as FXI holds and offers a broader approach to the Chinese growth story. Financials are FCA's top sector weight, but at just over 22%. Materials (18.85%), consumer discretionary (16.64%) and industrials (15.16%) also receive double-digit allocations. FXI also fails the diversity test when evaluating how the ETF's top-10 holdings are allocated. That group accounts for more than 61% of the fund's weight. On the other hand, FCA doesn't allocate more than 3.64% to any one stock. Another point in FCA's favor is that does offer some, albeit small, exposure to Baidu BIDU and Tencent Holdings, two of the biggest Internet names in China. FXI does not. FXI has its moments against FCA. Superior liquidity is an obvious one and the older ETF has the lighter expense ratio at 0.72% compared to 0.8% for its new rival. Still, those factors aren't enough for FXI to pull this one out. Recently, Benzinga has evaluated some of the new First Trust AlphaDEX international ETFs against existing rivals, concluding the First Trust AlphaDEX Brazil Fund FBZ is a better bet than the iShares MSCI Brazil Index Fund EWZ, but also noting that the iShares MSCI South Korea Index Fund EWY is preferable to the First Trust AlphaDEX South Korea Fund FKO. We'll break that tie by giving FCA the nod as the preferred way to take a nibble at China when the time is right.