U.S. investors likely have concerns about China’s politics, but they need not dissuade investing itself. As evinced by U.S. Treasury Secretary Janet Yellen’s recent visit to China, business interests can bridge divides like those between the two superpowers. Mending U.S.-China relations doesn’t just offer diplomatic benefits but also suggests potential economic cooperation and a boost to China investing.
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Yellen’s visit saw the Secretary recommend to Chinese leaders that the nation focus on domestic consumption. A boost to stimulus and further domestic economic support from the Chinese government could help support a resurgence. At the same time, it may prompt foreign investors to take a closer look at opportunities available in China.
Rather than avoid the nation for fear of an even worse trade war or just because of its politics, U.S. investors may want to diversify with a China allocation. For example, electric vehicles ETF KARS could provide one potent investing bridge between nations.
Both countries are investing in renewable technology. Closer business and diplomatic ties on the renewable energy front could see renewables investors look to China investing and away from a tough, high interest rate environment in the U.S.
The KraneShares Electric Vehicles & Future Mobility Index ETF (KARS ) tracks the Bloomberg Electric Vehicles Index. In doing so, it combines a China plurality with investments in Europe, Southeast Asia, and the United States. That helps offer a diversified, but China-heavy, electric vehicles investment.
Charging 72 basis points (bps), the strategy has shown some notable long-term performance. The ETF has outperformed its Factset Segment average over the last five years, returning 2.4%. That kind of long-term performance speaks to the long-term case for renewables and the patience of diplomacy. For those who see the long-term case for economic ties between the two key nations, KARS could appeal.
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