Two exchange-traded funds are looking for profits in China with two different strategies.
While the Rayliant Quantamental China Equity ETF dives into specific regions, the newly launched Roundhill China Dragons ETF buys the country’s largest stocks.
“[It’s] focused on just nine companies, and these companies are the companies that we identified as having similar characteristics to the size in the U.S.,” Dave Mazza, CEO of Roundhill Investments, told CNBC’s “ETF Edge” this week.
Since its inception on October 3, the Roundhill China Dragon ETF is down almost 5% as of Friday’s close.
Meanwhile, Jason Hsu of Rayliant Global Advisors is behind the hyper-local Rayliant Quantamental China Equity ETF. It has been around since 2020.
“These are local stocks, local names that you have to be a local Chinese to buy easily,” the company’s chairman and chief investment officer told CNBC. “It paints a very different picture because China is a different part of its growth curve.”
Hsu wants to provide access to names that are less known to U.S. investors but could deliver big gains, similar to recent Big Tech stocks.
“Technology is important, but many of the higher growth stocks are actually people selling water [and] people who run restaurant chains. So often they actually have higher growth than even a lot of the tech names,” he said. “There is very little research, at least outside of China, and they may represent what is more of a thematic aspect of current trade within China. “
As of Friday’s close, the Rayliant Quantamental China Equity ETF is up more than 24% so far this year.