KraneShares releases further commentary on China Environment ETF

Nov 16th, 2017 | By | Category: Equities

KraneShares has released further commentary on its recently launched thematic ETF – the KraneShares MSCI China Environment ETF (KGRN US) – which provides access to Chinese companies involved in producing environmentally beneficial products and services.

Jonathan Krane, CEO of KraneShares

Jonathan Krane, CEO of KraneShares.

Speaking about the investment case for the ETF, Jonathon Krane, CEO of KraneShares, said: “China is currently undergoing an environmental renaissance, pledging hundreds of billions of dollars to environmental protection projects and policies. We believe Chinese companies focused on contributing to a more environmentally sustainable economy may potentially benefit from this focused initiative.”

China has grown to become the second largest economy and second largest stock market in the world by market capitalisation. However, China’s rapid development has driven current levels of air and water pollution higher than those recommended by the World Health Organization.

In order to address pollution concerns, China has set ambitious goals to expand environmental protections. It is already the world leader in total renewable energy capacity, producing 28% of global capacity, yet they plan to spend an additional $360 billion on renewable energy by 2020. At the same time, China aims to achieve 50% commercial green building certification by 2020. Meeting these standards would create as much new renewable capacity as the entire US electricity system.

KGRN invests in companies that stand to benefit from the large-scale environmental plans set out by the Chinese government. The fund tracks the MSCI China IMI Environment 10/40 Index, which selects companies that derive at least 50% of their income from five key environmental themes: alternative energy, sustainable water, green building, pollution protection and energy efficiency.

“The MSCI China IMI Environmental 10/40 Index highlights MSCI’s commitment to helping global investors implement their responsible investment objectives,” said Christine Berg, managing director at MSCI. “The index incorporates MSCI ESG Research and is comprised of Chinese companies that focus on contributing to a more environmentally sustainable economy.”

The fund has an expense ratio of 0.80%.

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