Top China ETF and Mutual Fund

NEW YORK (TheStreet) -- In a head-to-head competition with the best China ETFs and mutual funds, my pick for the best China ETF, Claymore/AlphaShares China Small Cap(HAO), comes out on top. Returns are through July 31, other data is the most recently reported.

In addition to HAO, I compared two ETFs -- PowerShares Golden Dragon (PGP) and iShares FTSE/Xinhua China 25(FXI) -- plus two mutual funds -- Matthews China(MCHFX) and Fidelity China Region(FHKCX).

As of July 31, the largest of these funds was FXI, with $11 billion in assets. Both mutual funds had just under $2 billion in assets. PGJ had $450 million in assets, while HAO had $175 million, large enough to provide ample liquidity.

In terms of fees, the ETFs are cheaper. PGJ is the lowest, at 0.6 % of assets; HAO is next, at 0.7 %; then FXI, at 0.74 % of assets. MCHFX costs 1.23 % compared to 0.96 % for FHKCX. Clearly, there's a price to having a manager watching your investment, but Fidelity does manage to get reasonably close to the cost of ETFs.

Next, I compared turnover. Fidelity China Region had 133% turnover vs. 8% for Matthews China. Matthews China was lower than both FXI and PGJ, which had turnover of 24% and 20%, respectively. HAO did not have data.

A comparison of their portfolios shows wide variation. FXI is the most concentrated and the most heavily invested in large caps. It has 60% of its portfolio in the top 10 holdings and sports an average market cap of $46.3 billion. Next was PGJ, with 45% in the top 10, but with an average market capitalization of only $5.6 billion. FHKCX holds 34% in the top 10, with an average market cap of $14 billion, while MCHFX has 29% in the top 10 and an average market cap of $6 billion. Finally, HAO holds 21% in the top 10 and has an average market cap of $4.3 billion.