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Why This China ETF Should Continue Working

CHAD - Why This China ETF Should Continue Working

Over the past month, exchange-traded funds tracking Chinese A-shares, stocks trading on the mainland of the world's second-largest economy, figure prominently on the top 10 list of worst-performing non-leveraged ETFs.

Of course, that is good news for the Direxion Daily CSI 300 China A Share Bear 1X Shares CHAD 2.25%, a fund that has been highlighted multiple times in this space over the past two months.

With Friday's gain of about 2.4 percent, CHAD is up nearly 7 percent over the past month and more than 21 percent over the past 90 days. Those are not staggering gains, but remember CHAD is not a leveraged ETF. In a perfect world, when China's widely followed CSI 300 Index falls 1 percent on a particular day, CHAD should rise by the same amount.

What It Means

As A-shares have tumbled in recent months, investors have endured situations such as days where half the stocks trading on the...