At a time of soaring Chinese stocks, a new ETF tracking the performance of large Chinese companies, known as "China Dragons", debuted on the US stock market on Thursday. The ETF, fully named The Roundhill China Dragons ETF (DRAG), currently includes Tencent, pdd holdings, alibaba, Meituan, byd company limited, Xiaomi, jd.com, baidu, and netease, with the issuer collectively referring to these companies as the "China Dragons".

DRAG aims to track an equally weighted basket of stocks composed of 5 to 10 of the largest and most innovative Chinese technology companies. Roundhill Investment Management stated that at the time of its launch, these nine super large technology companies showed competitive advantages in economies of scale, solid fundamentals, and significant growth compared to their peers. This ETF will rebalance quarterly.

CEO Dave Mazza of DRAG stated that the difference between DRAG and other China-exposed ETFs, such as the $7.9 billion KraneShares CSI Overseas China Internet Fund (KWEB) and the $6.4 billion ishares core msci china index etf (FXI), lies in concentration.

DRAG's expense ratio is 0.59%, slightly lower than most similar ETFs.

Just this week, the four largest ETFs related to the Chinese stock market listed in the US have seen an inflow of $2.5 billion, with KraneShares' KWEB recording its largest single-day inflow ever on Tuesday. Fund managers and hedge funds are pouring into the Chinese stock market at a record pace.

Among the nearly 20 ETFs launched by Roundhill Company, the best performing is the $0.78 billion Roundhill Magnificent Seven ETF (MAGS), which tracks the seven sister stocks of the US. Launched in April 2023, it has risen by 40% this year. Mazza sees this as the US version of DRAG.