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Hone In On Health Care In China With This New ETF

Hone In On Health Care In China With This New ETF

As the world's largest country by population, China presents investors with a potentially lucrative health care opportunity. A new exchange traded fund looks to capitalize on that theme.

The Loncar China BioPharma ETF (NASDAQ: CHNA) debuted Wednesday, marking the second ETF from Loncar Investments.

The Loncar Cancer Immunotherapy ETF (NASDAQ: CNCR) is nearly three years old and has $55.64 million in assets under management.

What Happened

CHNA follows the Loncar China BioPharma Index, which was developed by Loncar founder Brad Loncar.

“China aims to become a leader in global medicine,” Loncar said in a statement. “Regulatory reform and a new rule allowing pre-revenue biotech companies to list on the Hong Kong Stock Exchange may signal a new era for innovative drug development in the region. We think this is an important trend in health care, as it has the potential to spur growth and benefit patients worldwide.”

Why It's Important

CHNA's underlying index tracks 22 stocks listed in Hong Kong. The new ETF's roster includes some U.S.-listed names such as Beigene Ltd. (NASDAQ: BGNE) and China Biologic Inc. (NASDAQ: CBPO). Weights for CHNA's holdings range from 2.37 percent at the low end to 5.24 percent at the top. About 20 percent of the new ETF's holdings trade on the Nasdaq.

“The China Food and Drug Administration has enacted recent reforms as the country modernizes the industry. Meanwhile, more Chinese citizens are able to afford innovative medicines as their standard of living rises,” according to ETF Trends.

CHNA can include biotech companies, drug manufacturers, diagnostics companies, wholesalers, distributors and service providers.

What's Next

CHNA will compete with the KraneShares MSCI All China Health Care Index ETF (NYSE: KURE). KURE debuted in late January and now has $32.22 million in assets under management.

CHNA, like KURE, charges 0.79 percent per year, or $79 on a $10,000 investment.

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