New York-based Global X has launched its second actively managed ETF – the Global X China Disruption ETF (KEJI US) – this time targeting Chinese companies with innovative and disruptive business models.
Chelsea Rodstrom, Research Analyst at Global X ETFs.
The fund has listed on Nasdaq Exchange and comes with an expense ratio of 0.75%. It is managed by Mirae Asset Global Investments, the parent company of Global X.
Mirae Asset will leverage its local portfolio management presence in Hong Kong and China, and its team of Asia-focused research analysts, to manage the portfolio on a day-to-day basis.
The portfolio managers have extensive track records in actively managed equity strategies targeting China.
Mirae Asset utilizes a fundamental, bottom-up approach to security selection which considers factors such as valuation, financial strength, competitive position in the industry, management track record, the sustainability of returns, and regulatory and political risks.
Global X will leverage its thematic research capabilities to pinpoint long-term, structural themes that are reshaping China’s economy through technological advancements, changing demographics and consumer preferences, or adaptations to the physical environment. This will feed ideas into the portfolio construction process and help to shape the fund.
According to Global X, themes that fit this profile currently include artificial intelligence, autonomous and electric vehicles, climate change, cloud computing, cybersecurity, e-commerce, education, fintech, 5G and the internet of things, healthcare innovation, infrastructure development, longevity, emerging markets consumers, robotics, artificial intelligence, social media, and video games and e-sports.
Several Chinese equity share classes are eligible for inclusion in the portfolio, including A Shares, H Shares, and American Depository Receipts. No stock will exceed a weight of 10% in the portfolio, while the aggregate weight of stocks classified to any single theme will be capped at 35%.
At launch, consumer discretionary stocks account for about one-third (32%) of the portfolio with the next largest sector exposures being information technology (19%), health care (15%), communication services (14%), and industrials (13%). Notable positions include Tencent (9%), Alibaba (7%), JD.com (5%), Meituan (5%), and Pinduoduo (3%).
Chelsea Rodstrom, Research Analyst at Global X, commented: “China is rapidly emerging as a hotspot for global disruption. The country’s cutting-edge technologies in areas like 5G, e-commerce, and gaming have placed Chinese enterprises on the world stage, and the growth of its healthcare and clean energy industries further underscores China’s expanding global influence.
“In bringing together our knowledge of disruptive themes with Mirae Asset’s seasoned portfolio managers, investors will have access to the dynamic and wide-ranging landscape of innovation in China with KEJI.”
The fund complements Global X’s existing suites of China-focused and thematic ETFs which collectively consist of 37 funds with more than $16 billion in assets under management.