China's not an ETF market, but a place for stock pickers to find alpha

• China is not an ETF market; it lacks the fundamental drivers (e.g., 3rd pillar pension programs, dollar-cost averaging) that fuel passive investment in developed markets.
• As a developing market with significant inefficiencies, China is well-suited for active equity managers to find 'alpha' and outperform the broader market.
• Foreign investors, particularly American, exhibit a strong lack of appetite for Chinese equities, despite the market's investibility and recent gains (A-shares and H-shares up ~25% over one year).
• China compensates for risk, making it investible for those with a longer-term time horizon, despite volatility.

Peter Alexander of Z-Ben Advisors argues that China is not an ETF market due to a lack of fundamental drivers for passive investment. Instead, its developing market status and inherent inefficiencies present significant opportunities for active fund managers to generate alpha. Despite record outflows and widespread foreign investor despondency, China remains investible and offers compensation for risk, requiring a longer-term horizon.