I am building a portfolio of ETF's, that track well-diversified international indices. I believe China will be a key player in the world economy for years to come, and therefore I purchased shares in the following ETF:
iShares MSCI China A UCITS ETF USD (Acc) - (See Factsheet).
However - I'm confused regarding the currency risk/exposure of investing in this ETF. I am Dutch - so my main currency is Euro. I bought the shares on Borse Frankfurt - in Euro's. However - the factsheet of the ETF states:
"The Index is calculated using China A Stock Connect listings based on the offshore Renminbi exchange rate (CNH). Your shares will be denominated in US Dollar, the Fund's base currency. The shares are listed on one or more stock exchanges and may be traded in currencies other than their base currency. The performance of your shares may be affected by this currency difference. In normal circumstances, only authorised participants (e.g. select financial institutions) may deal in shares (or interests in shares) directly with the Fund. Other investors can deal in shares (or interests in shares) daily through an intermediary on stock exchange (s) on which the shares are traded."
If I get it correctly - the return and dividends of the fund are generated in renminbi - after which they will be exchanged for U.S. dollars to pay dividends to shareholders (In my case re-invest as it is accumulating share). Return of the fund is also measured in USD. When I sell my share on the Borse Frankfurt - the dollar value of the share will be converted into Euro.
My question: what happens in this case, when the dollar depreciates compared to renminbi or euro??
P.s. this whole structure feels cumbersome and I wonder if there would be more "direct" way to invest in China - say a euro denominated China ETF?