Looking down the top ten of ENZL, accounting for 70% of the fund, there is little to no China exposure. The vast majority of New Zealand's exports are dairy and other agricultural products. The year on year increase in exports to China was NZD290 million, of which NZD106 million was whole milk powder.

For now ENZL has very little agricultural exposure but that may change soon. As noted above, Fletcher Building is largest company in the fund at 17% and it has a $5.8 billion market cap. Last December, dairy co-op Fonterra went public and currently has a market cap of $12 billion. iShares and index provider MSCI are both vague on when it will be added, but for now it is not in the fund and so the fund is not really leveraged to China.

If there is a slowdown in China, ENZL won't be immune to a decline but with the current makeup, it would be fundamentally detached from a China slowdown, allowing for a faster snapback from any decline. I also note that China is buying milk and food products which are typically not sensitive to economic cycles.

In trying to analyze an ETF it is important to consider the stocks in the fund and the sector weightings. If ENZL was heavy in consumer-discretionary companies that had a lot of exposure to the Chinese consumer then it would make more sense for holders of the fund to be concerned about a slowdown in China, but that is not how the fund is constructed.

At the time of publication, ENZL was a client holding of the author.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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