ETF Trends
ETF Trends

It is hard not to notice strong price action in China based equities this week, as FXI (iShares China Large Cap, Expense Ratio 0.73%) is currently embarking on its third consecutive “gap up on the open” day this week.

There has also been a fair amount of upside call buying in the product, as the ETF is now trading at its highest levels since late 2013. However, we have seen notable assets flow out of this fund year to date, even into price strength, as FXI has lost about $1.1 billion year to date via redemptions, bringing the total asset base under $5 billion currently.

The fund is still the largest China Equity focused ETP in the U.S. landscape however, and nearly five times the next largest China pure ETF in the category, that being MCHI (iShares MSCI China, Expense Ratio 0.61%, $955 million in AUM).

EWH (iShares MSCI Hong Kong, Expense Ratio 0.51%) is also considered part of this category and has a respectable $2.3 billion in assets under management currently. A newer entrant to the China space that has displayed notable out-performance compared to broad China equity benchmarks is KWEB (KraneShares CSI China Internet, Expense Ratio 0.68%), and this fund has impressively pulled in more than $78 million since its inception about a year ago in July of 2013.

Given the broad out-performance in Technology and specifically Internet names not only in China but across markets, specifically here in the U.S., as well as the increased level of interest that we have seen over at least the past year or two in the sectors, perhaps this rapid asset growth should not be too surprising.

We see that the top holding in KWEB is listed as Tencent Holdings Ltd. (9.89%), which should be a familiar name to those whom have followed our periodic coverage on SOCL (Global X Social Media, Expense Ratio 0.65%)
since it is often the #1 or #2 weighting in that ETF as well.

Other names of interest that have high weightings in KWEB are BIDU (9.06%), JD (7.48%), CTRP (7.25%), and QIHU (5.35%), and there are forty four names total in the underlying index. We see two other KraneShares China focused ETFs on the market as well, in KFYP (KraneShares CSI China Five Year Plan, Expense Ratio 0.68%) and KBA (KraneShares Bosera MSCI China A, Expense Ratio 1.10%) but being rather new to the marketplace, they have not drummed up the same level of interest that KWEB has at this point (about $3 million in each respectively in terms of AUM).

KraneShares CSI China Internet Fund

For more information on Street One ETF research and ETF trade execution/liquidity services, contact Paul Weisbruch at pweisbruch@streetonefinancial.com.

Street One Financial is an educational/research firm utilizing the Broker Dealer services of Precision Securities, a FINRA registered Broker/Dealer.