NEW YORK–(BUSINESS WIRE)–Core Values Alpha (CVA), a product of PowerFunds, an affiliate of MSA Capital, one of the most decorated China-focused investment teams, is today launching its first Exchange Traded Fund (ETF): the Core Values Alpha Greater China Growth ETF (CGRO).
CGRO is actively managed and a first-of-its-kind fund in a number of ways, particularly with regard to its underlying philosophy, which approaches China investing through an “America-first” lens.
“Savvy investors understand that China’s market fundamentals remain strong and that the country still has a long growth curve ahead of it, particularly relative to the U.S. These same investors also understand, however, that exposure to China must not be obtained through investment in companies or vehicles that compromise U.S. national security interests, American values, nor its position as a global economic and technological leader,” said Ben Harburg, Portfolio Manager at CVA. “We have created a rigorous, multi-layered approach with CGRO that helps ensure the companies in the fund’s portfolio are positioned to deliver alpha, but not to the detriment of the U.S.”
The investment process underpinning CGRO is unlike that of any China-focused ETF on the market. First, CVA’s 15 investment professionals on the ground in China surface the highest alpha companies with substantial business exposure to China. This basket of eligible equities is then reviewed by the CVA China Risk Board, which is composed of China economic, defense and political specialists, including former military generals, White House national security experts, and other highly experienced senior financial and regulatory officials. This board reviews CVA investment and research team reports on individual companies while also referencing their own networks to approve names for purchase.
Every company in the universe of eligible equities is then issued a CVA China Risk Scorecard, which involves extensive due diligence to trace supply chain, downstream customers, and a range of direct and indirect risk factors, such as support for the repression of civil liberties, ties to the Chinese military, susceptibility to U.S. sanctions or the possibility of sanctions in the near future, among others. These Scorecards provide a visual representation of a company’s threat levels to American values, U.S. national security, targeting for U.S. sanctions, and America’s economic and technological leadership.
The fund’s management team actively manage the fund’s portfolio by taking all of the findings from the CVA China Risk Board and the full range of CVA China Risk Scorecard results into account, resulting in a focused portfolio that provides secure exposure to China alpha.
“Investing in China requires on the ground experience and understanding, and our team is second to none in terms of the networks we have built and our track record of identifying the strongest companies in the most crowded fields,” added Harburg, while also noting that CVA’s American-owned sister firm currently manages over $1.7 billion in assets across more than 100 early- to mid-stage private companies, concentrated on Greater China.
“There is no ‘next China,’” he said. “While there are certainly other Emerging Markets poised for significant growth in years and decades ahead, none have the scale, organization, and drive to return the quantum of alpha as China. Rather than seeking to replace China, investors should rethink the vehicles through which they are attaining China exposure, reweighting toward those that are actively managed and carefully navigating the landscape of China risks to ensure that American interests are not compromised. These are no doubt complicated times to be investing internationally, but it is our belief our investors will be the beneficiaries, rather than the victims, of geopolitics.”
In addition to China-listed equities, CGRO also has the ability to invest in U.S. stocks as well and will allocate to the stocks of those U.S. companies with meaningful exposure to China and an ongoing reliance on China for continued growth.
“Telling the China growth story must include U.S. companies for which China is a major part of their revenue,” continued Harburg. “Additionally, the emergence of parallel Chinese and American hardware and software companies and services is creating a bifurcated internet. There are opportunities in both markets as this ‘splinternet’ becomes more pronounced, which makes it even more important that CGRO’s approach look at the U.S. and China in its research and portfolio construction process.”
CGRO is listed on the NYSE Arca. For more information on the fund, please visit https://www.cvafunds.com/.
About Core Values Alpha
Core Values Alpha (“CVA”), is a brand of the SEC Registered Investment Advisor PowerFunds, which is a 100% American owned asset management firm focused on the ETF space. The firm maintains offices in Beijing, New York, and Delhi.
About MSA Capital
MSA Capital (“MSA”) is a global investment fund which invests in Greater China and North America. The firm has invested in sectoral leaders across the key technology verticals in Greater China and maintains offices in Greater China, Southeast Asia, the Middle East, and North America. The firm manages in excess of $1.7 billion in capital from global institutional investors such as North American endowments, pensions, fund of funds, and asset managers.
Investors should consider the investment objectives, risks, charges and expenses carefully before investing. For a prospectus or summary prospectus with this and other information about the Fund, please call (888) 123-4589 or visit our website at https://www.cvafunds.com/. Read the prospectus or summary prospectus carefully before investing.
Investing involves risks and the possible loss of principal.
Growth Investing Risks. The Fund will invest in companies that appear to be growth-oriented. Growth companies are those that the Sub-Adviser believes will have revenue and earnings that grow faster than the economy as a whole, offering above-average prospects for capital appreciation and little or no emphasis on dividend income.
China Investing Risks. The Chinese economy is generally considered an emerging market and can be significantly affected by economic and political conditions and policy in China and surrounding Asian countries. A relatively small number of Chinese companies represent a large portion of China’s total market and thus may be more sensitive to adverse political or economic circumstances and market movements. The economy of China differs, often unfavorably, from the U.S. economy in such respects as structure, general development, government involvement, wealth distribution, rate of inflation, growth rate, allocation of resources and capital reinvestment, among others. The Public Company Accounting Oversight Board (“PCAOB”), which regulates auditors of U.S. public companies, has warned that it lacks the ability to inspect audit work and practices of PCAOB-registered accounting firms in China and Hong Kong. The PCAOB’s limited ability to oversee the operations of accounting firms in China and Hong Kong means that inaccurate or incomplete financial records of an issuer’s operations may not be detected, which could negatively impact the Fund’s investments in such companies. Under China’s political and economic system, the central government has historically exercised substantial control over virtually every sector of the Chinese economy through administrative regulation and/or state ownership. In addition, expropriation, including nationalization, confiscatory taxation, political, economic or social instability or other developments could adversely affect and significantly diminish the values of the Chinese companies in which the Fund invests. International trade tensions may arise from time to time which can result in trade tariffs, embargoes, trade limitations, trade wars and other negative consequences.
Emerging Markets Risk. Investments in securities and instruments traded in developing or emerging markets, or that provide exposure to such securities or markets, can involve additional risks relating to political, economic, or regulatory conditions not associated with investments in U.S. securities and instruments.
Non-Diversification Risk. Because the Fund is “non-diversified,” it may invest a greater percentage of its assets in the securities of a single issuer or a smaller number of issuers than if it was a diversified fund. As a result, a decline in the value of an investment in a single issuer or a smaller number of issuers could cause the Fund’s overall value to decline to a greater degree than if the Fund held a more diversified portfolio.
New Fund Risk. The Fund is a recently organized management investment company with no operating history. As a result, prospective investors do not have a track record or history on which to base their investment decisions.
Distributed by Foreside Fund Services, LLC.
Craft & Capital