China investing has offered investors upside and diversification for a long time, but of late, it’s turned off those concerned by a stuttering overall economy in the People’s Republic. Debt issues related to real estate continue to cast a long shadow over growth for the country’s economy overall.
That said, there are opportunities within certain subsectors. Manufacturing in advanced technologies, for example, can continue to offer significant upside, with one China manufacturing ETF spiking right now.
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That China manufacturing ETF, the KraneShares Electric Vehicles & Future Mobility Index ETF (KARS), presents an appealing option. The strategy tracks a market-cap-weighted index of electric vehicle firms, including some other companies involved in future mobility. KARS invests in a variety of sectors like energy storage, lithium and copper mining, and autonomous navigation technology.
China Manufacturing ETF KARS as a Thematic Play
Together, that leads to a concentrated portfolio of about 32 firms, with the top eight securities capped at 5% weights. If there are fewer than 32 holdings, however, the strategy may apply an equal-weighting scheme.
That approach has helped the China manufacturing ETF spike in the last month. Per YCharts data, KARS has returned 6.4% over the last one month. That has outperformed, for example, the MSCI AC Asia Index. That performance has helped the strategy show some signs of life in its tech chart. Its price rose above its 50-day simple moving average.
KARS has outperformed at least one notable Asia equities index of late.
Whether that renewed performance is due to anticipated macro support from the government, or from potentially increased demand in China, KARS has returned to the field of play. The fund offers U.S. investors a route into a specific China sector’s potential upside on top of continued diversification. Charging a 72 basis point fee, KARS may be poised to play a helpful thematic role for investor portfolios.
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