Has the China turnaround finally begun in earnest? Government stimulus is ramping up, but looking at one China tech ETF, investors may already be flocking back to China investing. That would change the landscape for many U.S. investors looking at opportunities for diversification. Investing abroad, specifically, can offer particularly potent diversification benefits on top of upside cheaper than many U.S. opportunities.
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The KraneShares Hang Seng TECH ETF (KTEC) presents one intriguing opportunity therein. The strategy has returned 15.8% over the last one-month period, per YCharts data. That far outpaces the MSCI ACWI Ex USA Net Total Return Index. What’s more, that performance helped the China tech ETF outperform the ETF Database Category and FactSet Segment averages. Over three months, the strategy has also outperformed those averages, suggesting the strategy has built a solid head of steam.
China tech ETF KTEC has outperformed a major global index.
Why might investors be looking at KTEC? As mentioned above, a China tech ETF offers an intriguing combination of tech upside and China-driven diversification. KTEC takes that one step further with its approach. The strategy tracks a market-cap-weighted index of the 30 biggest China tech names.
The fund invests in themes like internet, fintech, e-commerce, and digital technology. KTEC applies an 8% cap limit per security, which can help prevent the fund from concentration risks. The ETF hit its three-year milestone earlier this year, as well. The China tech ETF charges 69 basis points for its efforts.
The strategy could be poised for even more growth given how recently China’s government has enacted such major policy changes. Given how much of a monetary focus those policies have taken, those policy efforts could have a long reach. With the year drawing to a close, investors may also want to consider tax-loss harvesting into a foreign ETF like KTEC.
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