Chinese equities are back in focus as the US and China close in on a trade deal. We believe that simply moving into a general, broad-based China or emerging market fund may not be the most optimal approach.
Broad-based China or emerging market indexes often have greater weights to sectors such as financials and commodities while underweighting growth sectors, such as consumer technology.
Despite the recent expansion of technology and e-commerce in emerging markets, the largest sector by weight of the top 5 US-listed emerging market ETFs is financials with a median weight of 25%.
Discerning investors may consider adding KWEB to their current China or emerging market allocation in order to achieve the optimal sector exposure to match their specific risk/growth appetite.