KraneShares has launched a new actively managed equity ETF that provides exposure to multiple high-growth China investment themes by allocating primarily to its own ETFs.
Jonathan Krane, CEO of KraneShares.
The KraneShares China Innovation ETF (KGRO US) has been listed on NYSE Arca with an expense ratio of 0.99%, which includes acquired fund fees and expenses of 0.73%.
At least 85% of KGRO’s assets will be allocated amongst five China-focused KraneShares ETFs – four of these funds target companies within the internet, healthcare, clean technology, and 5G and semiconductors industries, while a fifth offers access to stocks traded on the Science and Technology Innovation Board of the Shanghai Stock Exchange.
The underlying ETFs are as follows.
The KraneShares CSI China Internet ETF (KWEB US) tracks the CSI Overseas China Internet Index which measures the performance of Chinese companies listed outside of mainland China whose primary business is in the internet and internet-related sectors. Eligible companies include those that develop internet and mobile internet software, provide internet services, manufacture home entertainment and educational software, and provide retail services primarily through the internet.
The KraneShares MSCI All China Health Care Index ETF (KURE US) tracks the MSCI China All Shares Health Care 10/40 Index which measures the performance of Chinese companies operating in the healthcare sector according to the Global Industry Classification Standard. All major types of Chinese share classes are eligible for inclusion.
The KraneShares MSCI China Clean Technology Index ETF (KGRN US) tracks the MSCI China IMI Environment 10/40 Index which measures the performance of Chinese companies that derive at least 50% of their revenues from environmentally beneficial products and services. The index is based on five key Clean Technology themes: Alternative Energy, Sustainable Water, Green Building, Pollution Prevention, and Energy Efficiency. All major types of Chinese share classes are eligible for inclusion.
The KraneShares CICC China 5G & Semiconductor ETF (KFVG US) tracks the CICC China 5G and Semiconductor Leaders Index which measures the performance of Chinese companies engaged in 5G and semiconductor-related businesses including 5G equipment, semiconductor manufacturing, electronic components, and big data centers. The index includes Chinese A-shares as well as listings in the US and Hong Kong.
The KraneShares SSE STAR Market 50 Index ETF (KSTR US) tracks the SSE Star Market 50 Component Index which measures the performance of the 50 largest companies listed on the SSE STAR Market, a new board of the Shanghai Stock Exchange that focuses on innovative science and technology companies from strategic emerging industries.
The current target allocation to each underlying ETF is KWEB 30%, KURE 25%, KGRN 20%, KFVG 15%, and KSTR 10%. However, up to 15% of the fund’s assets may be invested in pre-IPO private companies aligned with the above themes.
Asset allocation is based on an ongoing evaluation of market conditions and the maturity of the underlying investment themes. The prospectus notes that the opportunity set may be expanded to include additional ETFs as new themes emerge.
Jonathan Krane, CEO of KraneShares, said: “As we expand our suite of ETFs to cover multiple growth areas in China, many investors have asked us for a comprehensive allocation to each of these opportunities. KGRO provides investors with a model portfolio of our ETFs representing what we believe to be the top growth opportunities in China, in a single ETF.”