China’s push towards technological innovation got an added vote of confidence from the country’s president, which should help boost exchange-traded funds (ETFs) like the Global X China Innovation ETF (KEJI).
To achieve global influence, China realizes that mastery of technology is one prime area where it can maximize its efforts. The country has been taking a nationalized approach to technology, opting to bolster its own innovation instead of relying on other countries.
“China must strengthen top-down planning and pool resources nationwide to push for breakthroughs in core technologies,” President Xi Jinping said in the South China Morning Post.
“Xi told a meeting of the Central Commission for Comprehensively Deepening Reforms in Beijing that resource allocation should be optimized and key areas identified based on the country’s strategic needs, state news agency Xinhua reported,” the report added.
As such, it looks for funds like KEJI to capture any growth opportunities available in Chinese innovation. In addition to just technology, KEJI looks for innovation from other sectors such as industrials and consumer discretionary using an active management strategy.
An Active ETF for Chinese Innovation
Instead of following a passive index, KEJI utilizes active management for dynamic market exposure. This allows the portfolio manager to get in and out of positions should mark forces warrant the necessary portfolio changes.
Per its fund description, KEJI seeks to achieve long-term growth of capital. Normally, the fund will invest at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in exchange-listed companies that are economically tied to China.
The ETF offers investors the following:
- High growth potential: KEJI enables investors to access high growth potential through companies at the leading edge of multiple disruptive themes, re-shaping China’s economy.
- Experienced portfolio managers: KEJI’s portfolio managers have extensive track records in actively-managed equity strategies targeting China and disruptive innovations tied to its economy.
- ETF efficiency: In a single trade, KEJI delivers access to dozens of companies across a range of disruptive themes, along with the outperformance potential of active management.
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