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as china's stock market surges, a new etf "china dragon" that tracks the performance of china's major companies debuted on u.s. stocks on thursday. the full name of the etf is the roundhill china dragons etf (drag). its constituent stocks currently include tencent, pinduoduo, alibaba, meituan, byd, xiaomi, jd.com, baidu and netease. the issuer refers to these companies collectively as "chinese dragons". ".

drag is designed to track an equally weighted basket of stocks consisting of 5 to 10 of the largest and most innovative chinese technology companies. roundhill investments said that as of the time of launch, these nine very large technology companies have collectively demonstrated competitive advantages in terms of economies of scale, solid fundamentals, and growth that is significantly stronger than that of their peers. this etf will be rebalanced quarterly.

roundhill ceo dave mazza said drag is in line with other etfs that offer exposure to china, such as the $7.9 billion csi overseas china internet fund (kweb), a $7.9 billion fund under management, and the $6.4 billion ishares ishares fund. what's different about the china large cap etf (fxi) is concentration.

the four major china-related etfs attracted a total of us$2.5 billion in funds this week, with kweb, owned by jinrui, recording record inflows on tuesday. money managers and hedge funds are piling into chinese stocks at a record pace.

among roundhill's nearly 20 etfs, the best performing is the $780 million roundhill magnificent seven etf (mags), which tracks the performance of the seven largest u.s. stocks. the fund was established in april 2023 and is up 40% this year. mazza considers it the american version of drag.