This is a passive ETF that tracks an index of privately led Chinese companies, excluding state-owned enterprises in which the government holds a large stake. By screening out state-owned enterprises, it offers concentrated exposure to the growth of China's private-sector economy.

It suits investors who want to reduce their weighting in state-owned enterprises, invest in Chinese private-sector companies, and accept the volatility that comes with single-country concentration.

The ETF is managed by WisdomTree using a passive (index-tracking) approach.

The ETF tracks an index of privately led companies, excluding state-owned enterprises with a high proportion of government ownership among Chinese stocks. By reducing the weighting of state-owned enterprises, it focuses more closely on private-sector economic growth, and it spreads its holdings across Chinese private-sector companies in multiple industries to provide single-country exposure to China.

• Focus on private companies, excluding state-owned enterprises
• Exposure to China's private-sector economic growth

Assets under management (AUM) stand at $367.7M, and the expense ratio is 0.32% per year.

Compared with general China ETFs such as MCHI and FXI, the main points of comparison are its exclusion of state-owned enterprises and its holdings composition.

Chinese stocks react sensitively to China's economy, policy, the regulatory environment and global risk appetite, and given the high level of policy uncertainty, they tend to show large swings. Because the ETF excludes state-owned enterprises, its sector composition and performance can diverge from those of broad Chinese indexes.

Fund flows into and out of Chinese stocks vary widely with global risk appetite and with news on Chinese policy and regulation, and when expectations for private-sector growth rise, money sometimes shifts toward related products. It is also worth noting that performance can differ significantly depending on changes in Chinese regulation and policy.

Exposure to China's private-sector economy is its strength, while single-country concentration, policy and regulatory risk, and exchange rates are factors to consider.

For a focus on Chinese internet and technology companies, direct substitutes include KWEB, and for exposure to mainland A-shares, products such as ASHR are also worth comparing. To capture the broader Chinese market, a product such as GXC can also be considered. Of the MCHI, FXI and INDA shown in the table, the first two are general China ETFs that include state-owned enterprises, while the remaining one invests in India and therefore has a different country exposure. This ETF is differentiated by its focus on Chinese private-sector companies, excluding state-owned enterprises.

Here are the points to check before investing in CXSE. Exposure to China's private-sector economy is its appeal, but single-country concentration, policy and regulatory risk, and exchange rates need to be confirmed in advance. It is also advisable to compare it with general China and mainland A-share products.

Changes in Chinese policy and regulation, an economic slowdown and the yuan exchange rate are the main variables for short-term performance, and because of its single-country concentration, the ETF may be more volatile than globally diversified emerging-market products. Geopolitical variables and the external policy environment can also have an impact.

It is a suitable candidate for investors who want to reduce their weighting in state-owned enterprises and invest in Chinese private-sector companies. For a focus on Chinese internet companies or mainland A-shares, consider products such as KWEB and ASHR, and if you want private-sector exposure excluding state-owned enterprises, it is advisable to compare this product alongside them before choosing.