By Philip van Doorn, MarketWatch
Billionaire investor Ray Dalio last week reminded investors what’s important about China: Its rapid and sustained economic growth is so important that it’s risky not to invest there.
He also compared the scope of China’s rise to that of the British Empire and to the industrial revolution.
Chinese stocks have broadly underperformed U.S. stocks for many years. But over the next decade, you might be well-served by diversifying your holdings and investing at least some of your money in the most populous country.
Use fear to your advantage
Investing in China is thought to be risky, not least because of the daily dose of frightening headlines about the U.S.-China trade conflict or the unrest in Hong Kong:
That’s not to say there isn’t any risk. But when is fear overdone?
The iShares MSCI China ETF /zigman2/quotes/206267952/composite MCHI +0.0000% tracks the MSCI China Index, which includes 390 stocks of Chinese companies that are available to international investors. For stocks or American depositary receipts (ADRs) listed on U.S. exchanges, the U.S. tickers are used.
To put things into perspective, here are several charts comparing the performance of MCHI, which was established March 29, 2011, to the SPDR S&P 500 ETF /zigman2/quotes/209901640/composite SPY -0.06% .
First, a one-year chart through Aug. 9:
Now two years: