China investing remains an important consideration for investors, despite some economic uncertainty. The country’s government has yet to unleash its most powerful tools to boost the economy. That could provide a major boost to China’s economy in the course of 2024. Still, even absent such government intervention, investors have three thematic China ETFs to consider that can provide meaningful, helpful China exposure.
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KraneShares Electric Vehicles & Future Mobility Index ETF (KARS)
First, investors should pay attention to one of the key global manufacturing trends in electric vehicles. KARS stands out among thematic China ETFs for its approach to that key trend.
KARS tracks the Bloomberg Electric Vehicles Index for a 72 basis point (bps) fee. The index takes a market-cap-weighted approach to firms in the broader electric vehicle universe. That includes firms deriving revenue from energy storage, copper and lithium mining, and other important parts of the electric vehicle manufacturing landscape.
In doing so, the strategy has outperformed its FactSet Segment average of the last five years. With the transition to electric cars a long term opportunity, KARS can appeal.
KraneShares MSCI China Clean Technology Index ETF (KGRN)
Sticking with the global energy transition, KGRN may intrigue investors. Even while some of China’s companies feel the drag of the stagnant real estate market, electric vehicles and clean energy are long-term plays benefiting from a secular trend toward renewables.
KGRN tracks the MSCI China IMI Environment 10/40 Index for a 79 bps fee. The index looks for firms that derive at least 50% of revenue from their products and services. It looks for large-, mid-, and small-cap companies deriving revenue from environmental themes like alternative energy, energy efficiency, and more.
In doing so, the ETF has outperformed both its ETF Database Category and FactSet Segment averages over the last five years. That gives it some helpful diversification from the core of China’s economy.
KraneShares MSCI All China Health Care Index ETF (KURE)
When thinking defensive and diversified, it’s hard to beat healthcare. Among the thematic China ETFs, KURE offers exposure to the space that’s hard to beat. The ETF tracks the MSCI China All Shares Health Care 10/40 Index for a 65 bps fee. Taking a market-cap-weighted approach, it looks for firms of all cap sizes, offering a variety of liquidity and balance sheet profiles.
China investing isn’t the most straightforward area right now. The overall economy in the country is sputtering somewhat. However, by breaking down the market into smaller themes, investors can diversify their China exposure behind a preferred idea or theme.
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