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VIDEO: ETF of the Week: KWEB

BY | ETF Database
03/10/2025 | 44 VIEWS
On this episode of the “ETF of the Week” podcast, VettaFi’s Head of Research Todd Rosenbluth talks about th KraneShares CSI China Internet ETF (KWEB B) with Money Life host Chuck Jaffe. The pair covered a range of topics related to the fund, providing investors with a deeper understanding of the ETF.Chuck Jaffe: Welcome to the ETF of the Week, where we get the latest take from Todd Rosenbluth, head of research at VettaFi. If you go to VettaFi.com, you’ll find all the tools you need to be a savvier, smarter ETF investor. And you’ll get more details on the new, newsworthy, trending, and timely exchange traded funds that we talk about here. And of course, you’ll also be able to get information about Exchange. VettaFi is organizing Exchange. It is the largest ETF conference geared toward financial advisors. And it’s held March 23 through March 26 this year in Las Vegas. Stay tuned after Todd and I finish and you’ll get a short message with more information about Exchange. Todd Rosenbluth. Great to chat with you again. Todd Rosenbluth: It’s great to be back, Chuck. Chuck Jaffe: Your ETF of the Week is… Todd Rosenbluth: The KraneShares CSI China Internet ETF (KWEB) Chuck Jaffe: KWEB. The KraneShares CSI China Internet ETF. So China is now at the point where everybody’s worried about tariffs. Interesting pick, Todd. What’s up? Todd Rosenbluth: Well, it’s up. KWEB is up. It’s outperforming the broader emerging markets. It’s outperforming the U.S. equity markets thus far in 2025. KWEB itself gathered roughly $2 billion of net inflows in the month of February. We’ve seen investors in the past look internationally. But that’s where the growth is right now. Chinese internet stocks are growing; they’re outperforming. And we’re finding more advisors and investors are interested in this story. I’m sure we’re going to end up talking about tariffs, so I’ll hold my fire on that one. But the fact that KWEB is up as we’re talking this year as the U.S. stock market is down as the U.S. and China are in a tariff battle certainly sends a positive signal to me. Navigating Tariffs Chuck Jaffe: That, of course, is very interesting, because the expectation, at least at the initial onset of heightened tariffs, is that tariffs will be bad for the market — here at least. But tariffs are always seen as a punishment to some extent on a foreign country. And if it’s a foreign country, it therefore means that country’s markets. So as we’re recording this, it’s before we’ve seen the big impact of tariffs thus far. Why are you not worried about tariffs when so many people are? Todd Rosenbluth: Well, I disagree. I don’t think people aren’t worried about it from a Chinese internet standpoint. Otherwise, the market, KWEB would not be up nearly 20% for the year. So investors are concerned about the U.S. and we’re focusing on a China Internet ETF. But talking about the U.S. stock market being down, we are putting tariffs on China. That isn’t necessarily going to hurt the Chinese consumer and the Chinese internet buyer that is using Alibaba and Tencent. Those stocks are doing very well. And we find that this ETF has been underexposed. It was unloved for the last couple of years. I think it was an ETF of the Week in the past with my predecessor having done it. But we didn’t talk about it at all in 2024 because investors were not interested in having Chinese exposure in general, let alone Chinese growth stock exposure. That environment is back. We think KWEB is the most appropriate way of getting exposure to Chinese internet stocks within your portfolio. Chuck Jaffe: This was KWEB, the ETF of the Week back in June 2023. And at that time, it was a bit of a counterintuitive play. It is again a counterintuitive play from the standpoint of this fund. Since you obviously are not worried about the tariffs hitting the Chinese internet side of things, you can’t be that worried about trade wars for the same reason. Again, the fund up 20% just this year alone. That’s a lot of volatility in a market and in an area that you know is sensitive. So are you putting bumpers on this one? Like is there some sort of a caveat as to yes, you might be interested in this fund but keep it limited or, do something as you’re trading it because this one’s a little more volatile than most? China’s Market Volatility Todd Rosenbluth: Yes. So the volatility is something investors and advisors need to be mindful of. So let me just paint a broader picture. Emerging markets tend to be a small slice of a broad, well-diversified portfolio — emerging market equities, that is. China is the largest of those emerging markets in what you’d find like in an iShares or Vanguard ETF at roughly 25% of the portfolio. So if folks have exposure to emerging markets today, they have some exposure to China. They have less exposure to China than they’ve had in the last few years. As the Chinese stock market has underperformed, we think KWEB can be a complement to a developed international equity portfolio and an emerging equity portfolio. Obviously, China is an emerging market. So you can overweight Chinese growth stocks or Chinese internet stocks in a broadly diversified portfolio. But it needs to not be a dominant part of it. It is going to be volatile. China itself is going to be a volatile market. Chinese internet stocks are also going to be a volatile market. But we’re also seeing that many folks are leaning in. There are concerns about those slower or stodgier state-owned companies that are within the Chinese market. That’s not what you get with KWEB. You get the growth stocks. Alibaba and Tencent are the names that people are more familiar with. But there’s a whole roster of stocks that you find within this diversified portfolio that I can’t name off the top of my head. JD.com is another one that pops into my head, [but …there are 50-plus other stocks.] Chuck Jaffe: Let’s instead also try to figure out where your money comes from for this, because there are two logical possibilities. One, of course, is your emerging markets money or your international money. Take a slug of that and go in this direction. But the other is these are internet stocks. This is technology money. Do you have a preference as you think about it? Like where this fits, is this more emerging markets, less internet, or is this more internet — just different internet less emerging markets? Diversifying With KWEB Todd Rosenbluth: It’s both of those. It’s an emerging market internet play. But many advisors and investors have been overweight toward the United States and toward U.S. growth stocks. And we’ve talked in the past about how concentrated the QQQs, the Nasdaq-100-based ETFs have become. And should you diversify away from that. So one way of doing that is focusing on other U.S. equities stocks that are not those Mag Seven stocks. The other way is to focus outside the United States at growth and see if that’s where the growth is going to come. So we certainly have seen investors move some exposure from the U.S. They were overweighted toward U.S. equity stocks the last couple of years. And that worked. They’ve been underweighted toward international equity stocks. And that worked in the past. It’s not working in 2025. International equity stocks are outperforming developed U.S. stocks. We think you could rotate away from your U.S. growth into the China growth stocks that you’d find KWEB to diversify some of that mix within your portfolio. Chuck Jaffe: It’s KWEB, the KraneShares CSI China Internet ETF. Really interesting pick at these times. Dig into it more at VettaFi.com. Todd Rosenbluth, thanks for bringing it to us. We’ll talk to you again next week. Todd Rosenbluth: See you soon, Chuck. Chuck Jaffe: The ETF of the Week is a joint production of VettaFi and Money Life with Chuck Jaffe. And I am Chuck Jaffe. I’d love it if you check out my hour-long weekday show by going to moneyliveshow.com or by looking for it wherever you find your favorite podcast. And if you’re looking for information on your favorite ETFs or maybe what could become your favorite ETFs, go to VettaFi.com, where they’ve got all the tools you need to help yourself out. They’re on X @Vetta_Fi and Todd Rosenbluth, their head of research, my guest here on ETF for the Week, he’s on X too @Todd Rosenbluth. The ETF of the Week is here for you every Thursday, so make sure you don’t miss an episode by following along on your favorite podcast app. And we’ll introduce you to another exciting ETF next week. Till then, happy investing, everybody. Vetta-Fi Announcement: Stuck in the same patterns and routines? Trying to take your practice to the next level. You need to register for the Exchange Conference this month. Industry experts will be gathering in Las Vegas March 23-26 to share actionable information, network, and learn the latest innovations in practice management. Invest in your greatest asset —yourself — by registering at exchangeetf.com today. For more news, information, and analysis, visit the China Insights Channel.

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