Invesco China Technology ETF surges over 25% in 2025

The stock market has faced some challenges in recent weeks, with many tech stocks struggling. The S&P 500 has dropped over 4% this year, while the Technology Select Sector SPDR Fund has seen a decline of about 9%. Concerns about high valuations and rising expectations for artificial intelligence (AI) have contributed to this downturn. However, one tech-focused exchange-traded fund (ETF) is doing well. The Invesco China Technology ETF has surged more than 25% this year and may have more potential for growth. This fund includes Chinese tech companies that have started to attract more investor interest. Chinese tech stocks have lagged behind for a while due to worries about government policies. Yet, earlier this year, the AI company DeepSeek launched a competitive model similar to popular offerings like ChatGPT, but at a lower cost. This development raised questions about spending on AI in the U.S. and highlighted the potential of Chinese companies. Despite its strong performance, the China Technology ETF may still be a good investment option. It has a lower average price-to-earnings ratio compared to other tech funds, making it appear more attractive. While U.S. tech companies might face challenges from tariffs, Chinese firms that focus on the domestic market may be more stable investments. Key holdings in the ETF include Tencent, PDD Holdings, and Baidu. Baidu has introduced a new AI model that offers competitive pricing, while Tencent's chatbot is gaining popularity in China. PDD Holdings operates the well-known e-commerce site Temu. Investing in the Invesco China Technology ETF can help diversify your portfolio and provide access to potentially undervalued tech stocks. With strong growth prospects driven by AI, this ETF appears to be a compelling investment choice.