TigerShares debuts with China-US Internet Titans ETF

Nov 12th, 2018 | By | Category: Equities

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Jim Rogers-backed TigerShares has launched its debut ETF in the US, the TigerShares China-US Internet Titans ETF (TTTN US).

TigerShares US China Internet ETFListed on Nasdaq, the fund provides exposure to leading internet-related companies in China and the US.

Yang Xu, CEO of TigerShares, commented, “Today, China and the US are homes to a handful of so-called ‘internet titans’ which are the leading companies involved in a variety of rapidly growing internet-based industries that increasingly impact people’s daily lives across the globe, including e-commerce, cloud, search, social media, artificial intelligence, travel services, streaming media, online gaming, and more.

Xu continued, “The most successful internet titans enjoy first-mover advantages, scale economies, and brand dominance across multiple, high-growth categories worldwide. Investors can now invest in these market leading firms through TTTN, in a low-cost, concentrated ETF format.”

The fund tracks the Nasdaq China US Internet Tiger Index which consists of 20 securities – ten of the largest internet companies from both China and the US. Constituents are weighted according to their market capitalization with a cap of 8%. Additionally, no more than five stocks may have weights of 8% at each rebalance and all other stocks are capped at 4%.

Country exposure is relatively equally split between stocks in the US (50.6%) and China (45.6%) with the rest of the fund’s holdings in cash.

Alphabet (parent of Google), Facebook, Tencent, Alibaba, and Amazon are each trading around the maximum 8% security cap.

“These top-tier internet technology powerhouses reflect not only the success they have achieved in their domestic markets, but also the ongoing innovation that we believe shall keep them at the forefront of global growth in the future,” said Xu. “If you believe in the continued growth of the internet and the new technologies and business models that support it, China and the US are, in our opinion, where you will find the most successful market participants in the coming decades.”

Xu continued, “While we’re offering TTTN with this long-term internet growth dynamic in mind for buy and hold investors, we recognize there is a lot of volatility in the internet space, which can alternate between risk-on and risk-off conditions, based on market sentiment. So we think TTTN also has a place in the toolbox of the tactical trader, who might want long global internet stocks when a positive trend is in place, but reduce exposure when they want to be more defensive or de-risk their portfolio. The beauty of the ETF is that you can tactically add or reduce risk across the whole internet sector, depending on conditions.”

According to Steve Oh, the Head ETF Listings & Business Development at Nasdaq: “Companies like Amazon, Alphabet, Facebook, Alibaba, Tencent and Baidu are held by the fund.  Our data shows that the stocks in the TTTN portfolio trade an average of around $27bn each day.  Based on this data, large trade sizes would be relatively easy for market makers to provide because they can easily trade the underlying securities to hedge their risk and create or redeem shares to unwind risk. Consequently, large trades in TTTN should not cause significant market impact. ”

Oh added: “A different way to look at the portfolio liquidity is to assess how large a portfolio could be built if a market maker in TTTN wanted to be less than 15% of the average daily volume in any of the 20 stocks held by this ETF.  The current portfolio would allow a market maker to trade over 8 million ETF shares, or $230 million dollars in TTTN.”

The fund comes with an expense ratio of 0.59%. Income is distributed to investors on an annual basis.

TigerShares is an affiliate of Chinese online broker Tiger Brokers.

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