As for the potential addition of Alibaba to the Guggenheim China Technology ETF (NYSEArca: CQQQ), the matter is not as straight forward because AlphaShares is waiting on Alibaba’s industry classification from Standard & Poor’s. S&P has yet to announce whether it will classify Alibaba as a technology company or a member of the consumer discretionary sector.
The issue is a relevant one when considering that the U.S. companies Alibaba is most often compared to are Amazon (NasdaqGS: AMZN) and eBay (NasdaqGS: EBAY). Amazon is a member of the Consumer Discretionary Select Sector SPDR (NYSEArca: XLY), but eBay is found in the Technology Select Sector SPDR (NYSEArca: XLK). [China Tech ETFs Take Some Pre-Alibaba Lumps]
If Alibaba is classified as a consumer discretionary company, it may not immediately qualify for admission to CQQQ’s underlying index. However, AlphaShares did say it will find a way to include Alibaba in the AlphaShares China Technology Index, the index CQQQ tracks. The ETF, which allocates almost 21% of its combined weight to Baidu and Tencent, has outperformed the PowerShares QQQ (NasdaqGM: QQQ), the NASDAQ-100 tracking ETF, by two-to-one over the past two years.
YAO vs. FXI