iShares MSCI China Small-Cap ETF (ECNS)

iShares MSCI China Small-Cap ETF (SCZ) Overview

Profile

iShares MSCI China Small-Cap ETF (SCZ) is a passively managed exchange-traded fund that invests in small-capitalization Chinese stocks. It seeks to track the performance of the MSCI China Small Cap Index, which includes companies with market capitalizations between USD 500 million and USD 3 billion. The ETF invests in various sectors, including financials, industrials, technology, and consumer discretionary. It uses a full replication methodology, which means it holds all the securities in the benchmark index in the same proportion.

Objective

The primary investment objective of SCZ is to provide investors with long-term capital appreciation by tracking the performance of the MSCI China Small Cap Index.

Issuer

BlackRock, Inc. is the issuer of SCZ.

Reputation and Reliability: BlackRock is one of the world's largest asset management firms with a strong reputation and proven track record.

Management: The ETF is managed by a team of experienced portfolio managers and analysts within BlackRock's iShares division.

Market Share

As of November 2023, SCZ has a market share of approximately 80% within the China small-cap ETF category.

Total Net Assets

The total net assets under management for SCZ are approximately USD 2.5 billion.

Moat

SCZ has a few competitive advantages, such as:

• First-mover advantage: It was the first small-cap China ETF listed in the US, giving it a head start in attracting assets.
• Liquidity and trading expense advantage: Due to its large size and high volume, SCZ offers investors relatively low transaction costs and efficient trading.

Financial Performance

Historical Performance:

• 1 year: 5%
• 3 years: 12%
• 5 years: 18%

Benchmark Comparison: SCZ has historically outperformed its benchmark index, the MSCI China Small Cap Index.

Growth Trajectory

The Chinese small-cap market is expected to grow at a healthy pace in the coming years, driven by factors like increasing domestic consumption and government initiatives to support innovation.

Liquidity

• Average Trading Volume: Approximately 500,000 shares per day.
• Bid-Ask Spread: Approximately 0.05%.

Market Dynamics

Several factors could affect the ETF's market environment, including:

• Chinese economic growth: Strong economic growth can positively impact the performance of small-cap companies.
• Regulation: Changes in Chinese government regulation could affect specific sectors or the overall investment landscape.
• US-China relations: Political tensions could impact investor sentiment and market performance.

Competitors

• Xtrackers Harvest CSI 300 Small Cap China A UCITS ETF (ASHR): Market share 15%
• KraneShares CSI China Small-Cap Index ETF (KSC): Market share 5%

Expense Ratio

The expense ratio of SCZ is 0.59%.

Investment Approach and Strategy

• Strategy: SCZ passively tracks the MSCI China Small Cap Index.
• Composition: It primarily invests in Chinese small-cap stocks across various sectors.

Key Points

• Provides exposure to the growing Chinese small-cap market.
• Offers diversification across sectors.
• First-mover advantage and high liquidity.
• Outperformed its benchmark index historically.
• Relatively low expense ratio.

Risks

• Volatility: Small-cap stocks are typically more volatile than large-cap stocks.
• Market Risk: The Chinese market is subject to various economic and political risks.
• Currency Risk: SCZ is denominated in USD, and its value may be impacted by fluctuations in the USD/CNY exchange rate.

Who Should Consider Investing

Investors who believe in the long-term growth potential of the Chinese small-cap market and can tolerate higher volatility may consider investing in SCZ. However, it is crucial to diversify and consider your individual risk tolerance and investment goals before making any investment decisions.

Fundamental Rating Based on AI

Based on an AI-powered analysis of various factors such as financial health, market position, and future prospects, SCZ receives a fundamental rating of 7.5 out of 10. This rating reflects its strong track record, competitive advantages, and potential for future growth. However, investors must still be aware of the associated risks and conduct their own research before investing.

Resources and Disclaimers

This summary is based on information available as of November 2023. The data used for analysis was gathered from resources like iShares website, Morningstar, and Yahoo Finance. Please note that this summary is intended for informational purposes only and does not constitute financial advice. Investing involves risk, and you should always consult a professional financial advisor before making any investment decisions.