China ETF Switches Its Strategy After Stock Trading Halts

China’s use of trading restrictions amid its worst market rout in more than two decades has prompted a rare strategic change at one of three U.S. exchange-traded funds with access to the Shanghai and Shenzhen stock markets.

Krane Funds Advisors’ exchange-traded fund based on the MSCI China A International Index will temporarily switch from owning all of the stocks in the benchmark to holding a “representative sampling,” the firm notified U.S. regulators on July 10. Equity ETFs typically seek to fully replicate their benchmarks, according to Todd Rosenbluth, director of mutual fund and ETF research at S&P Capital IQ in New York, who added that sampling is more often used by fixed-income ETFs that would otherwise have to track down thousands of bonds comprising their indexes.