The China investing story has been a bumpy ride for investors lately, but that doesn’t mean that every China strategy is the same. In fact, investors can find China strategies that are still offering strong returns. One China equities ETF in particular, KFVG, has outperformed its entire China equities ETF Database Category over the last four weeks. What, then, does the strategy do to offer such returns?
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The KraneShares CICC China 5G & Semiconductor Index ETF (KFVG) tracks an index tied to 5G and semiconductor investing. The CICC China 5G and Semiconductor Leaders Index looks for Chinese companies classified by the Fuzzy Logic Industry Classification System. KFVG charges 65 basis points to do so.
As part of its approach, it looks for firms tied to semiconductors, 5G equipment, data centers, and more. It weights the top 30 firms to meet those standards by market cap, limited to 10%.
China Equities ETF KFVG’s Tech Action
That approach has helped it return 25.4% over the last month, per VettaFi data. The ETF Database Category and FactSet Segment averages, by contrast, came in at 11.8% and 13.7%, respectively. What’s more, it recently showed some tech action per YCharts, with the China equities ETF seeing its price rise above its 50-day simple moving average.
KFVG has seen some appealing tech action.
So, what role might it play moving forward, and why is it spiking now? Recent news coverage suggests analysts are seeing long-term value in Chinese chipmakers. That has boosted the fortunes of firms like Hygon Information Technology Co (688041), which saw its price rise 5.45% over the last month. With the U.S. ban on chip exports to China, Chinese chip firms look like a long-term play to feed the nation’s need for advanced materials.
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