A FTSE China index is a rules-based basket. Its name, eligible share classes, weighting method and return variant determine what it measures. Start with those definitions before comparing its performance with another index or a fund.
FTSE Russell's China index history and map identifies the FTSE China 50's origins as the FTSE/Xinhua China 25. Historical constituent notices therefore need their original index name and date. Use current ground rules for a present-day comparison.
Distinguish two commonly confused benchmarks
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| Benchmark | Core scope | Primary method source |
|---|---|---|
| FTSE China A50 | Large mainland Chinese companies available through Stock Connect, within the defined A-share universe. | China A50 ground rules |
| FTSE China 50 | Eligible Chinese companies listed in Hong Kong, including H shares, P chips and red chips. | China 50 ground rules |
The similar names and constituent counts do not make the baskets interchangeable. A50's rules describe selection of 50 large mainland companies from its eligible universe. China 50's rules specify a Hong Kong-listed universe and its own eligibility requirements. Check the date and version of both documents.
Use FTSE Russell's guide to Chinese share classes to distinguish A shares, H shares, red chips and P chips. Incorporation, listing venue and the provider's classification rules matter. Two listings associated with a business are not automatically identical securities or priced identically.
The China index resource page brings together factsheets, ground rules, constituent files and review notices. Record the exact benchmark used by a fund from the fund's own documents, including any capped or customized version.
Look through the name to the weights
A company's representation depends on more than its share price. Read the methodology for eligible share capital, free-float adjustments, liquidity requirements and any constituent caps. Ranking companies for selection and assigning their final weights are separate steps.
Inspect the largest constituents and sector weights as of a stated date. A fund with fifty names may still have concentrated exposure if a few names carry substantial weights. Comparing only the number of constituents hides that concentration.
Fictional example: the same two stocks, different returns
Stock X gains 10% and Stock Y loses 5% over one period. Basket A starts with 60% in X and 40% in Y; Basket B starts with 20% in X and 80% in Y. Assume no dividends, fees, cash flows, rebalancing or currency changes.
Basket A returns 0.60 × 10% + 0.40 × (−5%) = 4%. Basket B returns 0.20 × 10% + 0.80 × (−5%) = −2%. Their six-percentage-point difference comes entirely from initial weights. These are invented baskets, not FTSE index results.
For a real index comparison, inspect both universe and weights. A performance difference can arise from companies excluded from one basket, from different weights on shared companies, from currency, or from the chosen return variant.
Read a review notice with the effective date
A review announcement describes changes under the index rules. Record the announcement date, effective date, additions, deletions and any special treatment. Use the current ground rules to understand selection buffers and exceptional changes. Distinguish the date a change is announced from the session when it takes effect.
Rebalancing changes the basket used from that point onward. A removed company has not necessarily failed; it may no longer satisfy a size, liquidity or other eligibility condition. Likewise, inclusion is an index-methodology outcome, rather than a provider's recommendation to buy the stock.
When working with historical returns, use the provider's historical series and methodology context. Applying today's constituent list backward introduces survivorship and composition problems. Keep an as-of date on every holdings file you save.
Compare a fund and benchmark on equal terms
- Copy the full index name and series identifier from the fund's prospectus or factsheet.
- Identify the reporting currency and whether the return is price, gross total or net total return.
- Use matching observation dates and understand the fund's valuation time.
- Check the fund's fees, cash holdings, replication method and any currency hedge.
- Measure the return difference over the stated interval, then investigate the causes in the fund's report.
A fund's exchange-traded share price, its net asset value and its benchmark index are three different series. A short-term gap alone cannot tell you whether the fund's tracking process is poor; examine pricing time, spreads, costs and the period under review.
Use the market-reading worksheet to keep the definitions beside your calculations. For worked explanations, see currency and session effects and price versus total return.