KraneShares Trust (KCAI)

KraneShares Trust (NYSE ARCA: KWEB)

Profile:

KraneShares Trust (KWEB) is a U.S.-based ETF that invests in publicly traded companies in the Chinese internet and mobile internet sectors. It seeks to track the performance of the CSI Overseas China Internet Index, which comprises companies listed on the Hong Kong Stock Exchange and the NASDAQ Stock Market. KWEB's portfolio includes large-cap names like Alibaba, Tencent, Meituan, and JD.com.

Objective:

The primary investment goal of KWEB is to provide long-term capital appreciation by investing in companies that are expected to benefit from the growth of the Chinese internet and mobile internet sectors.

Issuer:

KraneShares:

• Reputation and Reliability: KraneShares is a reputable and experienced asset manager focused on emerging markets. Founded in 2011, it manages over $4 billion in assets across various ETFs targeting thematic and niche opportunities. KraneShares has earned a strong reputation for its innovative and well-designed products.
• Management: The ETF is managed by an experienced team with deep knowledge of the Chinese internet sector. The portfolio managers have significant experience in research, analysis, and portfolio construction.

Market Share:

KWEB is the largest China internet ETF listed in the U.S., with approximately 70% market share.

Total Net Assets:

As of November 10, 2023, KWEB has total net assets of approximately $6.8 billion.

Moat:

KWEB's competitive advantages include:

• First-mover advantage: KWEB was the first China internet ETF launched in the U.S., providing investors with early access to this high-growth sector.
• Strong track record: KWEB has consistently outperformed its benchmark, demonstrating its successful investment strategy.
• Experienced management team: The ETF benefits from the expertise of a dedicated team with extensive knowledge of the Chinese internet landscape.
• Liquidity: KWEB's high trading volume ensures easy entry and exit for investors.

Financial Performance:

• Historical Returns: KWEB has delivered impressive returns since its inception in 2013, with an annualized return of over 20%.
• Benchmark Comparison: KWEB has consistently outperformed its benchmark, the CSI Overseas China Internet Index, demonstrating its active management approach.

Growth Trajectory:

The Chinese internet sector is expected to continue its strong growth trajectory, fueled by rising internet penetration, increasing mobile usage, and growing e-commerce adoption. This bodes well for KWEB's long-term prospects.

Liquidity:

• Average Trading Volume: KWEB has an average trading volume of over 10 million shares per day, indicating high liquidity.
• Bid-Ask Spread: The bid-ask spread is typically tight, ensuring investors can buy and sell shares at competitive prices.

Market Dynamics:

Factors affecting KWEB's market environment include:

• Chinese government regulations: Regulatory changes in China can impact the performance of internet companies and the ETF.
• Global economic conditions: Macroeconomic factors like trade tensions and interest rate changes can influence investor sentiment towards emerging markets.
• Competition: The Chinese internet sector is highly competitive, with new entrants and established players vying for market share.

Competitors:

• MCHI: iShares China Large-Cap ETF (0.65% market share)
• FXI: iShares China 50 ETF (0.5% market share)
• CHIQ: China Internet ETF (0.4% market share)

Expense Ratio:

KWEB's expense ratio is 0.79%.

Investment Approach and Strategy:

• Strategy: KWEB passively tracks the CSI Overseas China Internet Index, investing in companies included in the index.
• Composition: The ETF holds a diversified portfolio of Chinese internet companies across various sub-sectors, including e-commerce, online gaming, social media, and online advertising.

Key Points:

• Focus on high-growth Chinese internet sector
• First-mover advantage and strong track record
• Experienced management team and high liquidity
• Potential for continued growth

Risks:

• Volatility: The Chinese internet sector is known for its volatility, which can impact the ETF's performance.
• Market risk: KWEB is exposed to various market risks, including economic downturns, regulatory changes, and geopolitical events.
• Currency risk: KWEB's investments are denominated in Chinese yuan, exposing investors to currency fluctuations.

Who Should Consider Investing:

KWEB is suitable for investors seeking:

• Exposure to the high-growth Chinese internet sector
• Long-term capital appreciation potential
• Diversification within their emerging market portfolio

Fundamental Rating Based on AI:

7.5/10

KWEB receives a good rating based on its strong track record, experienced management team, and access to a high-growth sector. However, its exposure to market and currency risks should be considered.

Resources and Disclaimers:

• KraneShares Trust website: https://kraneshares.com/kweb/
• Morningstar: https://www.morningstar.com/etfs/arcx/kweb/quote
• Investing in KWEB involves risks, and investors should carefully consider their investment objectives and risk tolerance before investing.