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I prefer investing in ETFs and spend a lot of time looking at ETFs across different markets, sectors, and asset classes. I like ETFs because they offer a simple way to study a theme through a basket of companies rather than a single stock.
In this series, I’ll share ETFs tied to different countries and regions, along with the industries, market trends, and investment stories behind them.
The first stop is China.
There are many ways to get exposure to Chinese assets, and each ETF captures a different part of the market. To start, I want to look at one of the longest-running U.S.-listed China ETFs: the Invesco Golden Dragon China ETF ($PGJ).
PGJ launched on December 9, 2004, so it has now been running for more than 21 years. It tracks the Nasdaq Golden Dragon China Index, or HXC.
What makes it different is that it focuses on Chinese companies listed on U.S. exchanges. That means its exposure is quite different from ETFs that invest heavily in Hong Kong- or mainland-listed stocks( like KWEB, MCHI, or FXI ).
To get into the index, a company generally needs to meet a few basic rules: it must trade on an eligible U.S. exchange, qualify as a China-based issuer under Nasdaq’s methodology, have a market cap of at least $100 million, average at least $250,000 in daily trading volume over the previous three months, and usually have been listed for at least three months.
The index uses modified market-cap weighting.
Nasdaq first weights companies by market cap, then applies caps to avoid too much concentration:
● No stock can be above 8% at rebalancing.
● The five largest companies can stay above 4%.
● Every other stock is capped at 4%.
As of August 14, 2026, PGJ had roughly $92.7 million in assets, an expense ratio of 0.70%, and around 70 holdings.
What makes PGJ interesting is that it has basically lived through every major China ADR cycle of the past two decades: the rise of Chinese internet companies, the U.S. listing boom, tighter regulation, the U.S.-China audit dispute, COVID, the property slowdown, and more recently the rebound driven by policy support and new technology themes.
And its returns show just how volatile that ride has been.
The most dramatic part of that history was probably the 2020–2022 reversal.
In 2020, PGJ gained more than 53%, helped by loose global liquidity, strong Chinese internet growth, and the EV boom. By February 2021, the ETF had climbed to around $74.64, with Chinese ADRs trading at pretty rich valuations.
Then the whole setup changed.
2021: Regulation Changed the Way China ADRs Were Valued
In 2021, regulation tightened sharply across internet platforms, education, and other sectors.
Didi came under a cybersecurity review shortly after its U.S. listing, while the “double reduction” policy completely changed the after-school tutoring industry.
PGJ fell 42.8% that year.
From that point on, overseas investors stopped valuing Chinese ADRs based only on revenue growth and earnings. Regulation, VIE structures, U.S. listing risk, and U.S.-China relations all became part of the valuation framework.
2022: Delisting Risk Stayed Front and Center
In 2022, Chinese ADRs had to deal with several problems at the same time: slower economic growth, COVID disruptions, property weakness, and U.S. audit pressure.
The Holding Foreign Companies Accountable Act created a real fear that many Chinese companies could eventually be forced off U.S. exchanges.
That pressure only started to ease toward the end of the year, when the PCAOB said it had obtained full access to inspect audit firms in mainland China and Hong Kong.
PGJ fell another 24.4% in 2022, making it two brutal years in a row.
2023: A Waiting Game
2023 was much quieter.
There was no major catalyst strong enough to change the trend, and Chinese ADRs mostly traded sideways while investors waited for a clearer macro or policy turning point.
PGJ finished the year down about 2.5%.
2024: Policy Support Brought Buyers Back
Things changed again in September 2024, when China rolled out a series of economic stimulus measures.
Chinese ADRs rallied fast. The Nasdaq Golden Dragon China Index gained close to 30% that month, while PGJ jumped around 23% in a single week.
It was another reminder that Chinese ADRs are still extremely sensitive to policy expectations and changes in risk appetite.
2025: DeepSeek Put Chinese Tech Back on the Global Radar
Then came DeepSeek.
In early 2025, DeepSeek pushed global investors to take another look at the technical capabilities of Chinese AI companies. At the same time, policy signals toward the private sector became more supportive.
By the end of February, the Golden Dragon China Index was already up more than 13% for the year.
PGJ eventually finished 2025 up 13.7%.
2026: Back to a More Mixed Market
In 2026, performance became more uneven again.
By the end of July, PGJ was down roughly 15% year to date.
But the headline return only tells part of the story.
If you want to understand what could drive PGJ next, it’s more useful to look at what the ETF actually owns now — and how that mix is changing.
What Does PGJ Hold Today?
As of July 31, 2026, PGJ’s top 10 holdings were:
The top 10 make up about 57.97% of the fund.
So even though PGJ owns around 70 stocks, its actual performance still depends heavily on a relatively small group of larger names.
HXC goes through quarterly reconstitution and rebalancing.
Reconstitution decides which companies enter or leave the index. Rebalancing adjusts how much weight each stock gets.
Comparing the April 30 holdings with the portfolio after the June quarterly reset, the main new additions in Q2 were:
● Maase ($MAAS)
● MMTec ($MTC)
● Julong Holding ($JLHL)
● Next Technology Holding ($NXTT)
Some of the names that disappeared from the portfolio included:
● LZ Technology ($LZMH)
● Jiayin Group ($JFIN)
● ZJK Industrial ($ZJK)
● X Financial ($XYF)
● UP Fintech / Tiger Brokers ($TIGR)
● Texxon Holding ($NPT)
● Here Group ($HERE)
Among the four new Q2 additions, MAAS was by far the most significant.
By the end of July, PGJ held around 220,000 shares of MAAS, worth roughly $3.4 million, giving it a 3.89% portfolio weight and making it the fund’s seventh-largest holding.
That’s notable because companies outside the top five are capped at 4% during rebalancing.
So MAAS was added at almost the maximum weight allowed for that group.
MAAS is a Chinese AI company in the middle of a business transformation. Its current focus includes enterprise AI solutions and AI computing infrastructure, supported by its own Mixture-of-Experts large language model.
PGJ also isn’t the only ETF holding MAAS.
Recent fund holdings show MAAS appearing in portfolios including the National Security Emerging Markets Index ETF, the Northern Trust Morningstar Emerging Markets Factor Tilt ETF, and the Nasdaq Composite Tracking Stock.
What PGJ Is Starting to Look Like
Zoom out, and PGJ has basically followed every major shift in the China ADR market over the past 20 years.
In the early days, the story was Alibaba, Baidu, JoyGen, and the rise of Chinese internet platforms.
Then came mobile internet, new consumer brands, and later the EV boom led by companies like NIO, Li Auto, and XPeng.
After the 2021–2022 regulatory and delisting shock, the market moved into a long valuation-repair phase.
Then DeepSeek showed up in 2025 and pushed global investors to pay attention to Chinese tech innovation again.
Now companies like MAAS, WeRide, and Pony AI are starting to bring AI, autonomous driving, and intelligent infrastructure into the PGJ mix.
PGJ is still mainly built around internet, consumer, and more mature technology companies.
But its next valuation cycle may depend less on simple “China ADR recovery” and more on something broader:
a repricing of Chinese technology assets, plus real growth from AI, autonomous driving, and intelligent infrastructure.
If this new wave of Chinese tech innovation actually turns into revenue and profit growth, PGJ could become a pretty interesting way for global investors to get exposure to the next China tech cycle.
