10 Best Performing Asia Pacific ETFs in 2023

In this piece, we will take a look at the ten best performing Asia Pacific ETFs in 2023, If you want to skip our analysis of the Asia Pacific sector, then take a look at 5 Best Performing Asia Pacific ETFs in 2023.

Asia Pacific is one of the most dynamic and fastest growing economic regions in the world. While the Western world and industrialized nations such as the United States have already developed their economies and squeezed out the maximum growth, countries in Asia still have quite some way to go. Their underdevelopment when compared to European colonial powers in the 1900s and the economic behemoth that is the U.S. is now providing them with sizeable growth opportunities which often attracts some of the most optimistic investors in the world.

Data from S&P Global shows that growth in the Asia Pacific over the past couple of decades has reshaped the global economy. This is because in 2000, APAC accounted for 27% of the world’s GDP while this percentage grew to 37% in 2021. While this in itself is important and striking, the true impact of Asia Pacific is expected to come over the next decade and a half. Growth in China and ASEAN countries is expected to further push this share to 42% of global GDP by 2040. In dollar terms, the region’s GDP was worth $9 trillion in 2000 and sat at $35 trillion by 2021. Naturally, the growth in share by the APAC region has to come from a reduction in the share that comes from other regions.

Slowing economic growth and the exit of the United Kingdom have ensured that the European Union (EU) continues to lose its share in the global economic pie. The EU’s global economic share has dropped from more than a quarter of global economic output (26.5%) in 2000 to less than a fifth (17.9%) in 2021 due to these factors. Finally, America, which is still the largest economy in the world, has seen its share drop from 30% to 24% in 2021, as China’s share grew from 3.6% to 18.6% during the same time period. Simply put, the rise of Asia and particularly China has ensured that the latter accounts for a larger portion of the global economy than the EU.

However, these days, the global economic thought process appears to be shifting, even if this shift is temporary. Most hopes about the economy this year were based on China rising after it eliminated its disastrous Zero COVID policy. However, lingering structural problems in the Chinese economy have ensured that this is not the case, as the Asian giant finds growing cracks in its property sector and the population unwilling to spend money due to worries about an unstable economy. China has grown these past few decades not only due to its large population but also due to Western investments in the Chinese sector which have created jobs and allowed China to sell its goods in the world. In fact, it’s unlikely that the world’s largest consumer technology company Apple Inc. (NASDAQ:AAPL) would be where it is today without China. Apple’s chief executive officer Mr. Tim Cook started out at the company as a part of the operations team, and it was his decision to outsource manufacturing to China. This was in the late 1990s, and since then, Apple has been able to create a robust supply chain that allows it to order the manufacturing of complex products and lower costs when compared to America.

Yet, China’s growth as an economy has also provided it with the soft and hard power to assert itself in a global arena. This assertion has created jitters in the financial world as asset managers are increasingly worried about the ‘investability’ of China for the next two decades. While geopolitical stability is naturally a big component of this equation, investors are giving more attention to the potential ‘Japanification’ of China. For those out of the loop, Japanficiation is a convenient way to recall the economic problems that led Japan to rot in the 1990s after its real estate sector crashed. In fact, analysts at Citi believe that China’s Japanification might actually be worse since the nation has faced a significant collective trauma due to the coronavirus pandemic which badly exposed the government’s inability (unwillingness?) to adequately support its people during a time of crisis. Additionally, analysts believe that while tensions between the U.S. and Japan were easier to alleviate since they were primarily economic in nature, those between the U.S. and China might be harder to iron through. If you want to take a look at Japan’s economic history, then read Top 20 Companies in Japan by Market Cap.

The tensions between the U.S. and China were also a topic of discussion during investment bank Morgan Stanley (NYSE:MS)’s latest earnings call where management commented:

Second, we found our country moving headlong into a debt ceiling crisis. While our view was it was likely to be resolved, there is no doubt it created unnecessary uncertainty in the markets in April and May. Thirdly, after rapidly raising rates over 15 months, the Fed reached a pause, if not a plateau at its recent meeting. And while we may not be quite at the end of rate increases, I believe we’re very, very close to it. Finally, strong rhetoric from government leaders from both the U.S. and China in recent weeks is evident, but there’s now been recent efforts to normalize relations and a constructive dialogue is surely welcome. Seeing these four not-insignificant macro concerns progressed positively, supported a more constructive tone in the markets, particularly evidenced in the last few weeks of the quarter.

Our Methodology

To make our list of the best performing Asia Pacific ETFs in 2023, we made a list of the biggest ETFs in terms of their market capitalization. Then, their year to date returns were calculated and the top ten Asia Pacific ETFs are as follows.

10 Best Performing Asia Pacific ETFs in 2023

10. First Trust India NIFTY 50 Equal Weight ETF (NASDAQ:NFTY)

Year To Date Share Price Gains: 11.24%

First Trust India NIFTY 50 Equal Weight ETF (NASDAQ:NFTY) is an exchange traded fund part of the First Trust fund family. It has net assets of $98.4 million and invests primarily in companies listed on India’s National Stock Exchange (NSE). The NSE is one of the biggest stock exchanges in one of the fastest growing countries in the world, and First Trust India NIFTY 50 Equal Weight ETF (NASDAQ:NFTY) invests in companies that are part of India’s NIFTY 50 stock index which itself is constituted of the top companies in the country.

Along with VanEck Vietnam ETF (BATS:VNM), iShares MSCI India Small-Cap ETF (BATS:SMIN), and VanEck India Growth Leaders ETF (NYSE:GLIN), First Trust India NIFTY 50 Equal Weight ETF (NASDAQ:NFTY) is one of the best performing Asia Pacific ETFs in 2023.

9. Invesco India ETF (NYSE:PIN)

Year To Date Share Price Gains: 12.21%

The Invesco India ETF (NYSE:PIN) is part of the Invesco fund family and another ETF that invests in India. It is larger than the First Trust NIFTY ETF, since it has net assets of $142 million. While attention on India has only recently started to coalesce, the Invesco India ETF (NYSE:PIN) was set up in 2008. Its investments are scattered across a variety of sectors but the biggest constituents are technology, energy, and financial services.

8. WisdomTree Emerging Markets Multifactor Fund (NYSE:EMMF)

Year To Date Share Price Gains: 12.27%

WisdomTree Emerging Markets Multifactor Fund (NYSE:EMMF) is one of the smallest funds on our list since it has net assets of just $4 million. However, as opposed to the previous two funds which focused exclusively on India, the fund invests in several Asian countries. While it is a global ETF that also invests in certain South American countries, overall, most of its investments are in Asia. Digging deeper, roughly 75% of the WisdomTree Emerging Markets Multifactor Fund (NYSE:EMMF)’s investments are in China, India, Taiwan, South Korea, and other countries.

7. iShares MSCI Taiwan ETF (NYSE:EWT)

Year To Date Share Price Gains: 12.38%

iShares MSCI Taiwan ETF (NYSE:EWT), as the name suggests, invests in Taiwanese companies. If you’re investing in Taiwan, then there are two companies that really need to be on your portfolio. These are the Taiwan Semiconductor Manufacturing Company (NYSE:TSM) and Hon Hai Precision Industry Co., Ltd. (OTCMKTS:HNHPF). Both of these are crucial Apple supply chain partners and rank among the largest companies of their kind. Naturally, it’s also unsurprising that 26.7% of iShares MSCI Taiwan ETF (NYSE:EWT)’s investments are in the two firms.

6. Franklin FTSE Taiwan ETF (NYSE:FLTW)

Year To Date Share Price Gains: 13.41%

Franklin FTSE Taiwan ETF (NYSE:FLTW) is a member of the Franklin Templeton fund family. It has net assets of $175 million and was set up in 2017. More than half the funds are concentrated in the information technology sector and as was with the iShares MSCI index, the two biggest shareholdings are in TSMC and Hon Hai.

iShares MSCI India Small-Cap ETF (BATS:SMIN), Franklin FTSE Taiwan ETF (NYSE:FLTW), VanEck Vietnam ETF (BATS:VNM), and VanEck India Growth Leaders ETF (NYSE:GLIN) are some of top Asia Pacific ETFs right now.

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Disclosure: None. 10 Best Performing Asia Pacific ETFs in 2023 in 2023 is originally published on Insider Monkey.