Declining trade risk with China and ongoing policy support in that country create tailwinds for China’s technology sector. Investors took note of the opportunity in July, flooding into the KraneShares CSI China Internet ETF (KWEB ) as the fund demonstrates ongoing outperformance.
Although tariffs remain a volatile and contentious reality this year, a tentative trade agreement between the U.S. and China helped ease investor fears over the summer. In the month of July, KWEB experienced net inflows of $1.02 billion, according to FactSet data.
The decline in perceived trade risk and the strong performance from China’s technology companies likely proved notable catalysts for summer investors. The fund appears well-positioned looking ahead, given ongoing consumer policy support within the country.
Diversify Your Technology Allocations With Outperforming KWEB
KWEB measures the performance of publicly traded companies outside of mainland China that operate within the country’s internet and internet-related sectors. It seeks to track the CSI Overseas China Internet Index. The Index provides exposure to the China internet equivalents of Google, Facebook, Amazon, and eBay. It trades in securities on the Nasdaq Stock Market, the Hong Kong Stock Exchange, and the New York Stock Exchange.
For tech investors, the fund offers notable diversification opportunities. This year, KWEB continues to consistently outperform U.S. technology sectors, measured by the Invesco QQQ Trust Series 1 (QQQ ). Though tariffs remain a risk, China’s technology sector is worth consideration given its strong performance and disruptive role within AI.
In the last few years, the fund has worked to convert all possible share classes to Hong Kong shares. It’s a calculated move away from ADRs to protect investors from added risk. Currently, 69.2% of assets held by KWEB list in Hong Kong as of August 7, 2025. And 18.4% of assets are in U.S. ADRs with a secondary Hong Kong listing, while 12.4% are assets listed solely on U.S. exchanges.
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