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Glovista Investments Debuts China Sector Rotation Model Featuring Global X ETFs

ETF Professor

Money manager Glovista Investments, which runs a variety of emerging markets and global investment strategies, said Tuesday it's rolling out a China sector rotation model based on 11 sector exchange traded funds issued by Global X.

What Happened

The aim of the China Sector Rotation Strategy is to outperform the widely followed MSCI China Index by at least 3% per year using Global X funds, such as the Global X MSCI China Energy ETF (NYSE: CHIE) and the Global X MSCI China Materials ETF (NYSE: CHIM).

New York-based Global X offers a relevant China ETF for each of the 11 sectors represented by the global industry classification standard (GICS).

“The global macro module seeks to tilt to Chinese sectors based on the outlook for near-term economic growth drivers, including: consumption, investment, net exports versus government spending, currency, as well as views on global style drifts and investor positioning,” according to a statement issued by Global X.

Why It's Important

Other Global X China sector ETFs include the Global X MSCI China Industrials ETF (NYSE: CHII), Global X MSCI China Consumer Discretionary ETF (NYSE: CHIQ) and the Global X MSCI Consumer Staples ETF (NYSE: CHIS).

The oldest members of the group are nearly a decade old while some of the new products are less than a year old.

The largest Global X China sector ETF is the aforementioned CHIQ, which has $160.22 million in assets under management. CHIQ is followed by the Global X MSCI China Financials ETF (NYSEARCA: CHIX) at $62 million and the Global X MSCI China Communication Services ETF (NYSE: CHIC) at nearly $22 million.

What's Next

This isn't the first time a U.S.-based issuer of China ETFs has partnered with a purveyor of investment models. Last week, KraneShares and Dorsey Wright said they're partnering on a relative strength model that will use eight KraneShares China and emerging markets funds.

With China's weight in global benchmarks increasing, institutional investors may be drawn to the new Glovista strategy, potentially driving more assets to the Global X sector ETFs.

“The sector and industry analysis module incorporates industry-specific themes, margin and growth dynamics, regulatory impact, and technical analysis,” according to the statement. “The ETF constituent module captures variances in factor exposures owing to the difference in ETF holdings versus the MSCI China Index composition. The bottom-up module tilts China sectors based on earnings, margins, leverage and valuation dynamics derived by aggregating data and stock-specific views at the individual company level for the largest constituents of each sector ETF.”

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