KraneShares, a New York-based issuer specializing in China-focused products, has launched a new ETF on NYSE Arca.
According to KraneShares, the fund enables investors to build tailored emerging market portfolios without duplicating their exposure to China.
The KraneShares MSCI Emerging Markets ex China Index ETF (KEMX US) provides exposure to emerging market equities while avoiding stocks listed in China.
According to KranShares, the ETF complements the firm’s core and thematic China funds, enabling investors to build tailored emerging market portfolios without duplicating their country exposure.
“Within emerging markets, KraneShares believes China is in a league of its own; an asset class unto itself distinguished by its market size and unparalleled growth,” said Jonathan Krane, Chief Executive Officer of KraneShares. “We believe that incorporating a strategic China investment strategy that distinguishes China from the rest of EM may help to optimize EM performance as a whole. KEMX is a great tool to enable a completion strategy around China.”
The fund is linked to the MSCI Emerging Markets ex China Index, which tracks large-cap and mid-cap companies within 23 emerging market countries, excluding China. With 667 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country.
China represents the largest country exposure within the MSCI Emerging Markets Index with a weight of 33%. Its exclusion, therefore, significantly alters country weights in the ex-China index compared to the full EM universe. South Korea takes the top country spot with a weight of 19.4%, up from 13.0%, followed by Taiwan (16.9%), India (13.7%), Brazil (10.8%), and South Africa (8.8%).
Financials and information technology lead the index’s sector exposures with weights of 25.2% and 20.3%, respectively, followed by materials (10.0%), energy (9.7%), and consumer discretionary (8.9%). The largest single constituents are Taiwan Semiconductor (5.5%), Samsung Electronics (5.3%), and Naspers (2.9%).
The fund comes with an expense ratio of 0.49% due to a contractual fee waiver in place until at least August 2020. Its gross expense ratio is 0.59%. The ETF is the thirteenth US-listed fund from KraneShares and its third broad emerging market ETF.
KraneShares also recently launched its first ETF in Europe – the KraneShares CSI China Internet UCITS ETF (KWEB LN). Listed in November 2018, the fund provides exposure to US and Hong Kong-listed Chinese internet and internet-related companies – companies KraneShares characterizes as local equivalents of the likes of Google, Facebook, Twitter, eBay, and Amazon. It comes with a total expense ratio (TER) of 0.85%.