China Sector ETFs On The Way?

ETF Trends reports that ETF provider GlobalX has filed for Chinese sector funds. Sectors would cover consumers (presumably both discretionary and staples in one fund), financials, energy, industrials, materials and technology. GlobalX does some unique things like Colombia (NYSE: GXG) and the Nordics (NYSE: GXF) and it has filed for Egypt among others which I think gives the company a chance of really building a presence in the ETF industry.

My thoughts on China have been the same for a while which is that in investing in China I do not want to own financials or rely on the export sector but instead want to try to capture the story on the ground. Years ago this meant owning big oil in China and for the last year or so China Mobile (NYSE: CHL). Clients are currently weighted in the neighborhood of 2-3% but I expect to increase exposure to 5-6% by including thematic ETFs that are somewhat heavy in China but avoid financials and exporters.

Regardless of the financial topic these days, China seems to be in the middle of the discussion; the US’ debt situation, the status of the dollar, IPOs, creating demand for industrial metals, hoarding gold and so on. My thesis all along (with no claim to originality) is that China is on a path to become increasingly more relevant in the world economic order.

Investors in other countries can access US sectors via funds so it only makes sense to be able to access sectors in other countries via funds. There are obviously sector ETFs that offer broad foreign exposure but not one sector from one country. If they list they stand to challenge the EG Shares Emerging Market Sector Funds which are all BRIC centric so China heavy. Investors either want the narrowness that the GlobalX filing offers or not, hopefully the funds do list so we get a chance to find out.

For a little more on China you can check out this from Marc Faber.

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