|Investment method||Benefits||Key risks and disadvantages|
|Buy shares in a private Chinese company||Direct ownership||Cannot speak Chinese, concentration of exposure to just one company. Corporate governance standards may be somewhat lax compared to NZ and no guarantee of receiving dividend payment, plus difficulty in selling the shares|
|Buy shares in a Chinese listed company||Direct ownership||Same as above|
|Buy units or shares in a Chinese index fund or an exchange traded fund||Provides exposure to the Chinese market index.
Good diversification and liquidity so easier to sell.
|China is slowing down so the index may suffer poor returns in the short term.
Potential volatility of returns.
|Investing into an actively managed fund that invests into China||A quality fund manager will buy and sell only those companies which are deemed to outperform. May be less volatile and can potentially give a better return but no guarantee.||Higher fund management fees will be charged.
Fund manager may underperform the index.
|Investing into a high quality actively managed international fund which has a concentration of large international stocks which have a high exposure to China.||Improved diversification as not 100% exposed in that fund to China - therefore lower risk. Piggybacking on the skill set of the fund manager in selecting the right international companies who can best manage their exposure to China to maximise the Chinese upside.
Fund manager can quickly sell out of those stocks.
Liquidity of investment.
|Will not have as great an exposure to China as that which could be achieved with the previous methods (or options). Fund management fees are likely to be higher than if using an index or exchange traded fund.|