KraneShares Trust (KBUF)

KraneShares Trust ETF Summary

Profile: KraneShares Trust offers a range of Exchange-Traded Funds (ETFs) focused primarily on China-related investments. They cover various sectors like internet and new technologies, electric vehicles (EV), healthcare, agriculture, renewable energy, clean technology and diversified China equities, and innovative thematic strategies like carbon neutrality. KraneShares employ both passively managed index tracking strategies and actively managed thematic strategies.

Objective: KraneShares' main investment goal is to provide investors with diversified access to the Chinese economy through various innovative and thematic investment approaches. They aim to capture growth opportunities in China's rapidly evolving landscape.

Issuer:

1. KraneShares:

• Reputation and Reliability: Founded in 2012, KraneShares has established itself as a leading provider of China-focused ETFs, with over $8.75 billion in assets under management (as of October 27, 2023). They are known for their expertise in the Chinese market and commitment to delivering innovative investment solutions.
• Management: The firm is led by experienced professionals with extensive backgrounds in finance, asset management, and China expertise. Importantly, KraneShares is majority-owned and controlled by its employees, fostering a strong commitment to its clients' success.

2. VanEck

• VanEck, the parent company, has been established since 1955 and has approximately USD 86.4 billion in global assets under management. It has a strong reputation in the industry, known for its commitment to active and ETF investing across a variety of sectors and regions, with a deep focus in emerging markets and commodities.

Market Share and Assets:

• KraneShares holds the largest share in the China thematic ETF space, managing approximately 40% of total assets in this category.
• Their total net assets under management (AUM) reached approximately USD 8.75 Billion as of October 27, 2023.

Moat:

KraneShares boasts several competitive advantages:

• First-mover advantage: KraneShares was among the first to introduce China-focused thematic ETFs, gaining significant brand recognition and investor trust in this niche market.
• Strong research capabilities: KraneShares emphasizes in-house thematic research, allowing them to identify emerging trends and develop unique strategies ahead of their competitors.
• Partnerships: Collaboration with reputable sponsors like VanEck and leading Chinese index providers adds credibility and strengthens their market reach.
• Active Management Expertise: KraneShares utilizes active portfolio management in many strategies, allowing for dynamic adjustments to capture new opportunities and navigate market volatility effectively.

Financial Performance: KraneShares' ETFs exhibit a diverse performance record depending on their specific focus and market conditions.

• Some ETFs, like KraneShares CSI China Internet ETF (KWEB), have delivered significant historical returns, exceeding broader China and US technology indices.
• However, others might experience fluctuations aligned with their underlying sectors' performance and overall market volatility.

Growth Trajectory:

KraneShares is experiencing consistent growth, driven by the increasing demand for China-focused investment options.

• Their AUM has been steadily growing, reflecting rising investor confidence and recognition in the firm's expertise.
• The continued expansion of the China thematic ETF space and the growing interest in China's evolving economy further fuel this positive trajectory.

Liquidity:

KraneShares ETFs generally exhibit good liquidity:

• KWEB: Average daily volume of around 2.25 million shares.
• KURE: Average daily trading volume of approximately 2.2 million shares.
• Bid-ask spreads vary depending on the specific ETF, with KWEB and KURE exhibiting spreads around $0.05 to $0.06.

Market Dynamics:

KraneShares ETFs are influenced by several market factors:

• Chinese economic performance and policy changes
• Global trade tensions
• Technological innovation in China
• Investor sentiment towards emerging markets and China's growth potential.

Key Competitors:

• iShares China Large-Cap ETF (FXI)
• iShares MSCI China ETF (MCHI)
• Invesco China Technology ETF (CQQQ)

Expense Ratios:

Expense ratios vary across KraneShares ETFs, ranging between 0.69% to 0.98% depending on the strategy and management style.

Investment Approach and Strategy:

KraneShares offers a diverse range of strategies:

• Index Tracking ETFs: Aim to replicate the performance of specific Chinese sector indices.
• Actively Managed Thematic ETFs: Employ a combination of quantitative models, fundamental analysis, and thematic research to select holdings and adjust portfolio allocations.

The composition varies across ETFs, encompassing stocks, bonds, and commodities depending on their specific objectives and investment themes.

Key Points:

• Exposure to China growth: Capture opportunities in the rapidly growing and evolving Chinese market across diverse sectors.
• Thematic and innovative strategies: Invest in emerging trends and disruptive technologies shaping China's economy.
• Experienced management team and strong research: Benefit from KraneShares' expertise in the Chinese market and their dedicated research capabilities.
• Liquidity and diverse product range: Choose from various ETFs with varying risk profiles and liquidity characteristics to suit investment goals.

Risks:

• Market volatility: Chinese equities and thematic investments can be subject to significant fluctuations.
• China-specific risks: Political, regulatory, and economic uncertainties in China can impact investment returns.
• Currency risk: Fluctuations in the Chinese Yuan can affect returns for foreign investors.

Who should Consider Investing:

Investors seeking:

• Diversification beyond traditional equity markets
• Exposure to high growth potential sectors in China
• Thematic investing aligned with specific trends in the Chinese economy
• Tolerance for higher volatility compared to broader market investments

Disclaimer: This information is for educational purposes and does not constitute financial advice. Always conduct thorough due diligence and consult a qualified financial professional before making investment decisions.

Resources:

• KraneShares website: www.kraneshares.com
• Morningstar ETF reports: www.morningstar.com/etf

Fundamental Rating based on AI: 7.8 out of 10

KraneShares Trust receives a solid rating based on its AI analysis. This rating reflects the firm's strengths:

• Strong market position in China thematic ETFs
• Experienced and reputable management team
• Commitment to innovation and deep research capabilities
• Diverse and growing product offerings