![]() The consumer discretionary/e-commerce DNA of the fund means this isn't the most well-diversified ETF, so investors looking for exposure to a broader cross-section of the Chinese economy should look elsewhere. The top ten holdings represent ~60% of the portfolio, with no single stock weighting more than 10% (note allocation restrictions remain in place, with only five securities allowed to cross 8%). Fast-growing e-commerce company PDD Holdings ( PDD) has also seen its allocation cut to 6.7% (down from 8.2% prior), below e-commerce platform JD.com ( JD) (6.8%). Meanwhile, leading online travel agency ( TCOM) is now the second-largest holding at 7.9% (up from <6% prior), moving Internet-related services and artificial intelligence company Baidu into third place at 7.7%. ![]() The fund's largest holding remains e-commerce leader Alibaba Group at 8.6%, though the stock's contribution is down slightly over the last few months. ![]() On a cumulative basis, the top five sectors accounted for 94.6% of the total portfolio. The biggest gainers were industrials and real estate at 5.3% (+1.1%pts) and 4.1% (+0.5%pts), respectively. At 25.2%, the communication services sector has also seen its contribution decline in recent months, while information technology has gained slightly at 7.2% (vs. actively managed funds, though it is by no means the cheapest US-listed passively managed vehicle for Chinese equities.Īs reflected in the table below, the fund's sector allocation continues to skew toward consumer discretionary at 53.9% (vs. The expense ratio makes this ETF a relatively cost-effective option vs. The ETF held a market value of $204m at the time of writing (down from ~$273m when I last covered PGJ) and comes with a 0.7% expense ratio (mainly from the 0.5% management fee). ![]() In line with the index, the fund primarily holds US-listed Chinese depositary receipts ('ADRs'), so investors will need to consider their risk tolerance toward the regulatory risks of the associated ownership structures. The Invesco Golden Dragon China ETF tracks, before fees, the performance of the NASDAQ Golden Dragon China Index. The PGJ portfolio primarily comprises US-listed depository receipts, though, so investors looking to add this ETF will need to be clear about how much regulatory/geopolitical risk they are willing to stomach.ĭata by YCharts Fund Overview - A Cost-Effective Chinese ADR Investment Vehicle Valuation-wise, the Chinese market isn't that pricey on fwd earnings, with consumer/tech-focused growth funds like the Invesco Golden Dragon China ETF ( NASDAQ: PGJ ) still trading below historical levels at ~19x fwd P/E. Plus, the benefits of increased consumption are only just beginning to translate into earnings, as highlighted by the most recent quarterly outperformance from consumer tech giant Tencent ( OTCPK:TCEHY ). Case in point - the supportive regulatory 'u-turn' toward Internet platform companies, with Alibaba's ( BABA ) surprise corporate split last month setting the stage for the split up of the other Chinese tech platforms down the line. While bears will argue that the easy money has been made following the post-November 2022 market recovery, the China re-opening trade is just moving into its second innings, in my view. With ~$2.6tn of excess savings still sitting on the sidelines as well, the pieces for a consumption-led earnings rebound are falling into place. I am 3D animator artist/iStock via Getty Imagesįundamentally, the Chinese economy has been recovering well since the re-opening last year, with industrial output and retail sales last month accelerating to +3.9% and +11%, respectively.
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