The Chinese economy has been at the root of the broader market malaise since the start of 2016. But, the world's second largest economy showed signs of improvement in March. China's factory indicators point to a pickup in the economy supported by greater stability in the yuan and a rise in its stock markets. Pressure on emerging markets including China eased due to the federal reserve's cautious stance to hike rates in the future. Higher rates in the u.s. mostly results in outflows from these markets.

China's service sector also expanded last month, which bodes well for the country's long-term goal of transforming into a consumer-driven economy. Increase in stimulus measures from Chinese authorities helped the service sector to move north.

Given the recovery in manufacturing and services, it will not be unwise to invest in mutual funds that are exposed to the Chinese economy. When you add industrial profits gaining immensely in the first two months of this year and consumer sentiment touching record levels last month, China doesn't seem to be a bad proposition.

Before we cherry pick some good funds, let's take a look at the latest data:

Manufacturing Expands

After eight consecutive months of decline, China's official manufacturing PMI came in at 50.2 in March. Any reading above 50 indicates expansion. There has also been a marked improvement in production and new orders. The production index went up to 52.3 in March from 50.2 in February, while the new orders index rose to 51.4 from 48.6 in February.

A separate indicator, the private Caixin manufacturing PMI, rose to 49.7 in March from 48.0 in February. In spite of being below 50, it turned out to be the index's highest reading in the past 13 months. Caixin Insight Group Chief Economist He Fan pointed out that “the output and new order categories rose above the neutral 50-point level, indicating that the stimulus policies the government has implemented have begun to take hold.”