The KraneShares CSI China Internet Fund (NasdaqGM: KWEB), the largest exchange traded fund exclusively devoted to Chinese Internet stocks, has added shares of newly public Alibaba (NYSE: BABA), making the Chinese e-commerce giant the ETF’s biggest holding.
KWEB, home to $112.3 million in assets under management as of Oct. 2, is the third ETF to add Alibaba to its roster, following the First Trust US IPO Index Fund (NYSEArca: FPX) and the Renaissance IPO ETF (NYSEArca: IPO). However, KWEB is the first dedicated Internet or technology fund and the first China ETF to add shares of Jack Ma’s company. [What Alibaba’s Valuation Means for ETFs]
With a market value of nearly $218 billion, Alibaba entered KWEB as the ETF’s largest holding, usurping Baidu (NasdaqGS: BIDU), China’s largest Internet search provider, for the top spot in the ETF. Baidu’s current mark value is just over $76 billion. The stock was almost 11.3% of KWEB’s at Thursday’s close, according to KraneShares data.
Other top holdings in KWEB include Tencent Holdings (OTC: TCEHY), JD.com (NasdaqGS: JD), Ctrip.com (NasdaqGS: CTRP) and Vipshop Holdings (NYSE: VIPS).
“We are excited to become shareholders in one of the world’s most innovative and dynamic companies. Alibaba’s IPO is a demonstration of the company’s historic success. We believe that the China Internet sector is a very attractive investment opportunity right now,” said Jonathan Krane, CEO of KraneShares, in a statement.
Even if Alibaba entered KWEB at only a modestly higher weight than Baidu (that data will update later Friday), say at 11.5%, KWEB would feature a significantly larger Alibaba allocation than the aforementioned ETFs. For example, IPO currently sports a 9.6% weight to the stock while FPX’s Alibaba weight is just 2.8%.
The KraneShares CSI New China ETF (NYSEArca: KFYP), KWEB’s stablemate, is expected to add Alibaba when that ETF rebalances in December. Alibaba makes for a logical addition to KFYP because the ETF allocates 58.6% of its combined weight to technology and consumer discretionary names while featuring a combined 34.7% weight to Tencent and Baidu. [This ETF Will Add Alibaba]
KraneShares CSI China Internet Fund
ETF Trends editorial team contributed to this post.