Invesco has launched a China technology ETF that focuses on innovative technologies instead of computer hardware and software companies.
The Invesco MSCI China Technology All Shares Stock Connect UCITS ETF (MCHT) is listed on the London Stock Exchange with a total expense ratio (TER) of 0.49%.
MCHT tracks the MSCI China Technology All Shares Stock Connect Select index which offers exposure to 100 Chinese companies that earn revenues from areas such as internet and digitization, mobility, autonomous technology, industrial innovation and digital healthcare.
Using the MSCI China All Shares Stock Connect index as its universe, the index calculates a ‘relevance score’ for each stock that reflect the proportion of revenues generated in those industries.
Companies that are illiquid and have a low ‘relevance score’ are removed from the index.
The final 100 companies are weighted by multiplying the company’s ‘relevance score’ by its free-float market cap in order to ensure the index is weighted to companies earning more revenue from technology.
Gary Buxton (pictured), head of EMEA ETFs and indexed strategies at Invesco, commented: “China has long been known for its capacity to mass-produce and export goods, but modern China is now home to many of the world’s biggest innovators involved in cutting-edge technologies.
“Beijing aims to transform the country into a global leader in innovation and its latest Five-Year Plan emphasised a focus on achieving major breakthroughs in core technologies and annual increases in R&D spending.”
Chris Mellor, head of EMEA ETF equity and commodity product management at Invesco, added: “Companies in the information technology sector account for less than 20% of the index weighting. The largest sector exposures are currently in consumer discretionary and communication services.
“However, this is not a sector ETF. The focus is where a company is making its money, what technologies are underpinning its revenue. In that way, sector classification is immaterial.”
This is the second China ETF Invesco has launched this year. In March, the firm launched a broad-based China ETF, the Invesco MSCI China All Shares Stock Connect UCITS ETF (MCHN), that tracks the aforementioned MSCI China All Shares Stock Connect index.