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Fund Spy

Top Funds With Lots Of China Exposure

These four diverse funds have all loaded up on China stocks.

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When China talks these days, people listen. That country's power to move world markets was driven home on June 20 when the Chinese government announced plans to let its currency, the yuan, appreciate against the U.S. dollar. China had been keeping the yuan closely pegged to the dollar since the depths of the 2008 financial crisis as a way of keeping its value stable amid all the economic uncertainty.

Untethering the yuan from the dollar was widely seen as a vote of confidence in the Chinese economy and the world economy in general. The move will hurt Chinese exporters, but will make it cheaper for China to import goods, including the raw materials that the country has been consuming at a prodigious rate. For those reasons, China's announcement gave commodity prices a boost and caused world stock markets to jump. While many of those gains evaporated in the short term as worries about the economy came back to the forefront, there seems to be cautious optimism that, in the long run, this move will help the China economy, and thus the China stock market.

China stocks are held by a wide variety of U.S.-based mutual funds. Not surprisingly, they're most prevalent in China-specific funds such as  Matthews China (MCHFX) and  Columbia Greater China (NGCAX), and in slightly less-specialized funds such as  Templeton BRIC (TABRX), which invests in the hot emerging markets of Brazil, Russia, India, and China, and the various funds that specialize in Pacific/Asia stocks. Most emerging-markets funds have significant China exposure, as do many diversified foreign-stock funds, and even some domestic-stock funds looking for some pop in their portfolio. (Back in April 2009, we looked at domestic stock funds with the most exposure to China and India.)

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David Kathman does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.