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China stocks rallying this week as stimulus boosts investor optimism on the country's market here. Now, if you want to play in the China trade without cashing into specific names, ETFs might be the way to go. As part of this week's ETF report brought to you by Invesco QQQ, we've got Todd Rosenbluth, who's the VettaFi Head of Research. Todd, great to have you back on the program here with us. All right, so I know you have been tracking the stimulus that has been thrust into the economy in China and now investors are trying to figure out, okay, what is the trade that they should or could be initiating on an ETF perspective? How does that play out?

So, for much of the year, China has underperformed the broader emerging markets, and so investors actually had been gravitating towards these ex-China ETFs. There are ETFs that offer emerging market exposure, but strip out China. So, iShares has a popular product EMXC. State Street actually recently launched a ex-China ETF, but this China stimulus that we're talking about could be the necessary boost to get more investors focusing on China. The Chinese stock market did very well in the past month. So an ETF like GXC, that's the Spider S&P China ETF. That's a broad market exposure ETF. You gets you have the opportunity to get China A shares, you get exposure to the broader Chinese stock market, uh, industrials, financials, as well as more growth-oriented sectors. And then KWEB, which is the KraneShares ETF, the China internet version that they have. And KWEB is targeted towards what you would imagine, the Alibabas, the Baidus, the Tencents, that are the well-known names and many others that give you exposure to those faster-growing companies in China. So we think many investors have been underexposed to China this year. Now is a great opportunity using ETFs, get the benefits of diversification to tap into some of those ETFs.

With that in mind, are there ETFs that actually hold US-based companies with the more outsized exposure into China based on either their their revenue or just the percentage of business that they do in the region?

So I'm not familiar with ones that are specifically focused on China, but you certainly are going to get more exposure with your large cap oriented strategies. So large cap companies in the US have multinational exposure. Apple is of course getting some of its revenue, uh, from China. So is Microsoft, and those are part of the S&P 500. Uh, but we at VettaFi think we're going to see actually a shift and some favoring towards small and mid-cap strategies in the fourth quarter given that we've seen the beginning of a multi-rate cut cycle.

Todd, while we have you here, we've also been tracking, of course, the port strikes as well. And a lot of investors might be wondering if there is even an ETF play when you're considering what's taking place at the ports and ultimately the labor negotiations that are playing out.

So this is obviously going to have an probably a negative impact across the economy, and I'm not qualified to tell you the levels of depth that it's going to impact the economy, but what I would say is that there's an ETF likely for many things, and there are transportation oriented ETFs. So the iShares US Transportation ETF, IYT, is the largest of those transportation oriented ETFs. And you can look inside the portfolio of of this and another one from State Street, and maybe I'll get to in a second, but IYT, you can see the sub-industry breakdown as to their exposure to cargo, their exposure to so ground transportation, passenger transportation, um, airlines, railroads. Uh, the other ETF, just so I make sure I get it in, is from State Street. It's the Spider S&P Transportation ETF, XTN. Now, the major difference between these two is that XTN is equally weighted, so it has more exposure to those small and mid-cap companies that I was alluding to earlier that could benefit from the economic efforts that from the Fed cutting interest rates, whereas IYT is more market cap weighted, and so Uber is actually the largest holding in IYT.

Todd, I always say it every time. One day we're just going to have a jam session, plug in that guitar, uh, put the quarter inch jack in and plug it up to an amplifier. That day is not today, but

I'll bring my guitar next time to the studio.

There we go. Todd Rosenbluth, VettaFi Head of Research, thanks so much for taking the time.

Thank you.