New WisdomTree China ETF Avoids State Owned Companies, Overweights Tech

Chinese stocks have clearly been turbulent of late as the nation’s relatively new market goes through its growing pains. Investors looking beyond the recent volatility to China’s exciting economic future may want to leg into the new WisdomTree China ex-State-Owned Enterprises ETF (CXSE), said Christopher Gannatti, Associate Director of Research at WisdomTree. 'The main benchmarks are 70% or more weighted to state owned companies,' said Gannatti. 'What we are doing is saying ‘Own China, but don’t necessarily own the state owned companies’. We think this is a very exciting new way to own China and it hasn’t existed in the past.' The WisdomTree China ex-State-Owned Enterprises ETF is down nearly 5% since it was unveiled at the beginning of July. WisdomTree defines state owned enterprises as those where the government owns more than 20% of a company’s outstanding shares. By removing China’s state-run companies from the fund, the CXSE maintains a very limited exposure to banks and energy stocks. Instead, information technology names dominate the ETF, accounting for approximately a third of its assets. CXSE also boasts a slew of U.S.-listed Chinese internet players such as Alibaba (BABA), Baidu (BIDU), JD.com (JD) and Ctrip.com (CTRP).