ASHR
Xtrackers Harvest CSI 300 China A-Shares ETF
stock NYSE ETF

I was going to add ASHR and VNM for extra diversification but doing nothing is better

I currently hold VT and nothing else. I think markets are almost perfectly efficient and I can't beat them. So, my stance is to be as neutral as possible, and let the collective wisdom determine the fair price of assets. However, there is a small issue that bothers me, and I'm wondering if VT is truly geography-neutral.
Here is the issue: VT weights assets by free float, so China comes in around 3%. Headline market cap would put it meaningfully higher. Part of the gap is state-held blocks that nobody can buy, fine. But a big part is the A-share inclusion factor: mainland shares enter the index at roughly a quarter of their float.
These A-shares carry risks for foreigners that don't exist for domestic investors: capital controls on the way out, weaker legal standing, the general possibility of never repatriating the money. Meanwhile the price of an A-share is also set by domestic investors, who don't bear any of that, but also have limited investment options. So the fair price for a chinese citizen is not the same for a foreigner.
You can see this directly in dual-listed companies, where the Shanghai listing trades way above the identical Hong Kong listing, and has for decades.
So the market for Chinese stocks is segmented, and the price I'd pay as a foreigner in the mainland market is set by people playing a different game than me. Which means "just buy the missing A-shares to restore neutrality" doesn't really work: I'd be paying a premium set by trapped domestic capital while bearing risks they aren't pricing.
What I've considered:
Buying a broad China fund like FLCH (0.19%) to scale up my China exposure. Cheap (still 3x VT though), but it mostly duplicates the sleeve VT already holds: offshore listings, same inclusion factor. It doesn't add the missing exposure, but it fixes the China exposition
Buying A-shares directly through ASHR or KBA. This is the actual missing piece, but the fees are 0.56-0.65%, and per the above I'd knowingly buy the expensive side of a segmented market.
Doing nothing.
I keep landing on doing nothing, but I'm not fully at peace with it. The honest conclusion seems to be that a true neutral world portfolio is simply not available to me: the missing China exposure is missing precisely because I'm a foreigner, and every instrument that claims to fill the hole either duplicates what I have, overcharges me, or sells me the wrong thing at the wrong price. "Investable world at float weight" is the actual product on the shelf, and the neutrality I had in mind when I bought it doesn't exist for anyone sitting outside China.
I know this is very minor in the grand scheme of things, and the missing sleeve is around 5%, but nonetheless it bothers be a little.

I was going to add ASHR and VNM for extra diversification but doing nothing is better

I currently hold VT and nothing else. I think markets are almost perfectly efficient and I can't beat them. So, my stance is to be as neutral as possible, and let the collective wisdom determine the fair price of assets. However, there is a small issue that bothers me, and I'm wondering if VT is truly geography-neutral.
Here is the issue: VT weights assets by free float, so China comes in around 3%. Headline market cap would put it meaningfully higher. Part of the gap is state-held blocks that nobody can buy, fine. But a big part is the A-share inclusion factor: mainland shares enter the index at roughly a quarter of their float.
These A-shares carry risks for foreigners that don't exist for domestic investors: capital controls on the way out, weaker legal standing, the general possibility of never repatriating the money. Meanwhile the price of an A-share is also set by domestic investors, who don't bear any of that, but also have limited investment options. So the fair price for a chinese citizen is not the same for a foreigner.
You can see this directly in dual-listed companies, where the Shanghai listing trades way above the identical Hong Kong listing, and has for decades.
So the market for Chinese stocks is segmented, and the price I'd pay as a foreigner in the mainland market is set by people playing a different game than me. Which means "just buy the missing A-shares to restore neutrality" doesn't really work: I'd be paying a premium set by trapped domestic capital while bearing risks they aren't pricing.
What I've considered:
Buying a broad China fund like FLCH (0.19%) to scale up my China exposure. Cheap (still 3x VT though), but it mostly duplicates the sleeve VT already holds: offshore listings, same inclusion factor. It doesn't add the missing exposure, but it fixes the China exposition
Buying A-shares directly through ASHR or KBA. This is the actual missing piece, but the fees are 0.56-0.65%, and per the above I'd knowingly buy the expensive side of a segmented market.
Doing nothing.
I keep landing on doing nothing, but I'm not fully at peace with it. The honest conclusion seems to be that a true neutral world portfolio is simply not available to me: the missing China exposure is missing precisely because I'm a foreigner, and every instrument that claims to fill the hole either duplicates what I have, overcharges me, or sells me the wrong thing at the wrong price. "Investable world at float weight" is the actual product on the shelf, and the neutrality I had in mind when I bought it doesn't exist for anyone sitting outside China.
I know this is very minor in the grand scheme of things, and the missing sleeve is around 5%, but nonetheless it bothers be a little.