WisdomTree, a US-based provider of exchange-traded funds (ETFs), has announced the launch of the WisdomTree China Dividend ex-Financials ETF (CHXF) on the NASDAQ Stock Market.
The WisdomTree China Dividend ex-Financials ETF (CHXF) is designed to provide broad-based exposure to Chinese dividend-paying stocks outside of the volatile financial sector.
CHXF is designed to provide broad-based exposure to Chinese dividend-paying stocks outside of the financial sector.
Luciano Siracusano, WisdomTree Chief Investment Strategist, stated: “The case for investing in China has become increasingly apparent to investors, but we believe some of the most popular China index-based strategies fail to offer diversified exposure. In fact, the FTSE China 25 Index – tracked by the biggest China ETF in the US – has more than 50% of its weight in the financial sector.”
The largest US-listed ETF tracking Chinese equities by assets is the iShares FTSE China 25 Index ETF (FXI), which launched back in October 2004 and has accumulated almost $4.6 billion. As of 20 September 2012, companies in the financial sector accounted for 52.6% of this fund.
“We think investors should be able to access the growth potential of China without taking on such concentration risk, and have designed CHXF to offer a broader, diversified basket of Chinese dividend-paying securities,” noted Siracusano.
By removing the volatility of the financial sector and emphasising the importance of dividends, a key driver of total returns over the past decade, the fund offers a meaningful alternative to traditional China index-based strategies.
With the exclusion of financials, the largest sector becomes energy, which contributes 24.4%. This is followed by materials with 14.7%, telecommunication services with 14.6%, and industrials and consumer staples each with 13.3%.
“The addition of CHXF makes for WisdomTree’s third ‘ex-financials’ strategy fund, joining The WisdomTree Dividend ex-Financials ETF (DTN) and The WisdomTree International Dividend ex-Financials ETF (DOO),” added Siracusano. “We have found that removing financials is an attractive tool for investors focusing on risk management in particular equity markets.”
The fund tracks the propriety WisdomTree China Dividend ex-Financials Index and has an expense ratio of 0.63%.