NEW YORK ( TheStreet) -- Last week we looked at technology as a way to gain exposure to areas of the Chinese economy where money is going to be spent. Such a strategy avoids sectors that may see a slowdown, such as manufacturing.Right on cue comes the new KraneShares CSI China Five Year Plan ETF ( KFYP). BIDU) each have double-digit weightings, while the third-largest constituent, Want Want Holdings (WWNTY:PNK), has a 3.3% weight. Obviously, the remaining holdings have smaller weightings than that. Any sort of meaningful price impairment for Tencent or Baidu likely would be a drag on the fund. The big idea behind KFYP is essentially what I discussed last week. The segments captured in the fund are where China's government has said money will spent, and that should bode well for the companies in the fund.
The heavy weighting in technology, most of which is in Tencent and Baidu, leaves a lot less room for some other market segments including car companies, toll roads and other travel-related companies such as C-Trip ( CTRP), which is up 44% this year but accounts for only 1.35% of KFYP. The reason to mention these parts of the market is that part of the perceived American lifestyle includes driving a car and traveling, which is now accessible to a larger portion of the Chinese population, and many of the corresponding stocks have done well because of it. The total weighting of stocks in this segment appears to be less than 10%. That means if this sector continues to do well, it wouldn't be enough to offset a decline in Chinese tech. Another area in the five-year plan that was just re-emphasized this week is railway construction, which is important to help connect various regions of this large country and allow manufacturing to expand into the more rural western part of China. Although the materials and engineering firms involved are mostly represented in the fund, the weighting is not large enough to realistically move the needle of the fund's share price. FXI) has been a productive holding, and given that fund's 52% exposure to the financial sector, it could be a while before broad-based investing in China makes sense again. As mentioned above, technology and the other components of KFYP have a tailwind of favorable demand characteristics and have a good chance of continuing to outperform. At the time of publication, Nusbaum had no positions in securities mentioned. Follow @randomroger This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.