China’s goal of self-reliance will certainly rely on innovation. Right now, the second-largest economy sits firmly atop the list of the World Intellectual Property Organization (WIPO) when it comes to innovation on a global scale.
The WIPO noted that East Asia, in particular, is the residence to six out of 10 global science and technology clusters. On a country-by-country basis, China leads in that category.
“According to the 2023 edition of the WIPO’s Global Innovation Index, China has 24 sci-tech clusters, up from 21 last year and making China the country with the greatest number of such clusters,” a XinhuaNet article said.
Investment capital poured into research and development has certainly helped China’s case, as ideas can’t become reality without an influx of dollars (public and private). Given this innovation growth, exchange traded fund (ETF) investors may want to give the KraneShares China Innovation ETF (KGRO) a closer look.
“China’s remarkable achievements in innovation and output mirror the emergence of new global growth engines, which are inseparable from the great importance the Chinese government attaches to IP strategy and the continuous improvement of the country’s IP policies,” the article added, quoting the words of WIPO Deputy Director General Wang Binying.
An Active Fund Focused on Innovation
When it comes to identifying investment opportunities in ETFs that target China’s innovation ecosystem, KGRO offers a compelling option, especially given its active management component. Given this, KGRO offers dynamic exposure allowing for portfolio changes when market conditions warrant adjustment. That is imperative given the volatile economic conditions in China currently.
Furthermore, KGRO is essentially a fund of funds that offers exposure to various KraneShares ETF products:
- KraneShares CSI China Internet ETF (KWEB)
- KraneShares MSCI All China Health Care ETF (KURE)
- KraneShares MSCI China Clean Technology ETF (KGRN)
- KraneShares CICC China 5G & Semiconductor ETF (KFVG)
- KraneShares SSE STAR Market 50 Index ETF (KSTR)
If investors want more targeted exposure to these individual funds, they can solely allocate investment capital into each fund as a separate position. As of September 19, the fund is heavily focused on KWEB, comprising just over 30% of the fund’s assets, while KURE comes in second at about 26% of the fund.
The focus on KWEB highlights the strength of technology right now, especially with the focus on artificial intelligence (AI). That said, AI is permeating sectors like the healthcare industry, which warrants exposure to KURE.
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