KraneShares launches GDP-weighted China-focused EM ETF

Feb 17th, 2015 | By | Category: Equities

KraneShares, a New York-based exchange-traded fund provider focused on China, has unveiled its latest ETF: the KraneShares FTSE Emerging Markets Plus ETF (BATS:KEMP).

KraneShares has announced the launch of the China-focused KraneShares FTSE Emerging Markets Plus ETF.

NY-based KraneShares has announced the launch of the China-focused KraneShares FTSE Emerging Markets Plus ETF.

Listed on BATS Exchange, the new ETF is linked to the newly launched FTSE Emerging incl China Overseas non-R/QFII GDP Weighted Index.

The index is gross domestic product (GDP) weighted and includes China A-Shares and China N-Shares. It has an overweight to China (48% total weight) and India (17% total weight) – a 23% and 5% higher allocation than the FTSE Emerging Index, respectively.

The index’s China investment universe includes China A-Shares and China N-Shares, which includes stocks such as Alibaba, Baidu, and others. The FTSE Emerging Index does not include China A-Shares or N-Shares.

Commenting on the launch, Mark Makepeace CEO of FTSE, said: “We are excited to partner with KraneShares to launch a GDP weighted product. Since its inception, the FTSE Emerging GDP Weighted index has performed higher than its cap-weighted counterpart. Attribution analysis shows that the primary contributing factor to the outperformance of the FTSE Emerging GDP Weighted Index over the period was the GDP Weighted index’s overweight position in China.

Brendan Ahern, Chief Investment Officer of KraneShares, added: “A GDP weighted investment approach directly aligns with KraneShares’ investment philosophy as China’s GDP is the second largest in the world7 and thus commands a larger total weight in our index vs market cap weighted emerging markets indices. We believe a complete China equity allocation – China A-Shares, N-Shares and Hong Kong listed shares – can deliver better returns and increased diversification vs most investors’ China allocations which have been limited to Hong Kong listed Chinese companies. Furthermore, KEMP will be the first U.S. listed ETF to purchase China A-Shares through the Shanghai-Hong Kong Stock Connect Program, which launched last November and allows international investors to buy mainland China securities without needing a special quota.”

Jonathan Krane, CEO of KraneShares, continued: “KraneShares FTSE Emerging Markets Plus ETF (KEMP) is a milestone for the ETF industry as the first U.S. ETF to offer Emerging Markets and China A-Share exposure. KEMP may help investors increase and diversify their total portfolio allocation to China by including China A-Share and N-Share equities. We believe that China’s capital markets will consistently outperform other emerging and developed markets over the next decade. Our goal is to develop innovative exchange traded funds to provide global investors with solutions to capitalize on the China investment opportunity. We are confident that KEMP will deliver an Emerging Markets ETF with a more sophisticated and robust China equity exposure.”

The fund has net total annual fund operating expenses of 0.68%.

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