Alibaba, the world's largest online retailer, has enthralled
investors with what could be the largest tech initial public
offering in history, with an eye-popping market value of $150
billion to $250 billion.
It makes up about 80% of China's online shopping, with sales
eclipsing bothAmazon.com (
) and eBay (
) combined at $38.5 billion, Chinese media reported.
Here's a look at five ETFs that will most likely pounce on the
e-commerce juggernaut soon after it hits the
1. Renaissance IPO ETF (
) swoops up initial public offerings within the first 90 days of
their stock market debut and sells them after two years.
It currently includes 61 companies, fronted byZoetis (
) andWorkday (WDAY).
Launched in October 2013, it's tumbled 4% year to date,
lagging theSPDR S&P 500 ETF Trust's (SPY) 2.4%
return.PowerShares QQQ Trust (QQQ), tracking the 100 largest
nonfinancial stocks on the Nasdaq, is nearly flat for the
2. First Trust U.S. IPO Index Fund (FPX), carries the 100
largest IPOs, ranked quarterly by market value. The major
difference between FPX and IPO is that FPX holds stocks for four
years.AbbVie (ABBV), Facebook andGeneral Motors (GM) top the
roster. FPX is nearly flat this year.
3. KraneShares CSI China Internet ETF (KWEB) holds 28 Chinese
companies engaged in online services and software stocks that are
traded in the U.S. and Hong Kong. The biggest names are
Tencent,Baidu (BIDU) andQihoo 360 Technology (QIHU). KWEB is down
2% year to date.
4. PowerShares Golden Dragon China Portfolio (PGJ) holds 78
U.S.-listed Chinese companies. With half of the portfolio
dedicated to technology, many of its top holdings overlap with
It's more diversified, with exposure to consumer staples,
discretionary names, health care, telecom, energy and
industrials. PGJ is down 7% year to date.
5. SPDR S&P Emerging Markets ETF (GMM) holds a whopping
865 U.S.-listed stocks from China, Russia, Brazil and other
GMM is up 2% year to date.
As one the most promising IPOs this year, Alibaba is expected
to raise $20 billion. But a stomach-churning drop this year in
formerly high-flying tech stocks and their U.S. peers such as
Amazon should give investors pause.
"You're in the market cycle in which momentum stocks are under
pressure, and that generally doesn't bode as well for IPOs," said
Duncan Rolph, managing director of Los Angeles-based Miracle Mile
Advisors, which oversees $260 million in assets. "China has
lagged the U.S., and there is real concern with China's growth
rate and equities as a whole."
Neena Mishra, director of ETF research at Zacks Investment
Research in Chicago, is bullish on China ETFs for long-term