KraneShares Trust (KEM)

KraneShares Trust ETF: A Comprehensive Overview

Profile

KraneShares Trust is an exchange-traded fund (ETF) focusing on investing in Chinese stocks. Its primary focus is the China A-share market, which comprises shares of companies listed on the Shanghai and Shenzhen stock exchanges. The ETF offers exposure to a diversified portfolio of these stocks, aiming to track the CSI 300 Index. This index represents the 300 largest and most liquid A-share companies across various sectors, including information technology, financials, and healthcare.

KraneShares Trust employs a passive investment strategy, meaning it passively tracks the CSI 300 Index rather than actively picking individual stocks. This approach allows investors to gain broad exposure to the Chinese A-share market while minimizing individual stock selection risk.

Objective

The primary investment goal of KraneShares Trust is to provide investors with long-term capital appreciation by tracking the performance of the CSI 300 Index. The ETF seeks to achieve this goal by investing in the stocks included in the index in the same proportions as their weighting in the index.

Issuer

KraneShares Trust is issued by KraneShares, an asset management firm specializing in China-focused exchange-traded funds (ETFs). The firm was founded in 2013 and is headquartered in New York City.

Reputation and Reliability: KraneShares has a strong reputation in the ETF industry, with a track record of providing innovative and high-quality products. The firm is known for its deep expertise in the Chinese market and commitment to transparency.

Management: The ETF is managed by an experienced team with extensive knowledge of the Chinese A-share market. The team includes portfolio managers, analysts, and traders who actively monitor the market and make necessary adjustments to the portfolio.

Market Share

KraneShares Trust is one of the largest and most popular China A-share ETFs available in the US market. It currently holds a market share of approximately 15% within its niche segment.

Total Net Assets

As of November 2023, KraneShares Trust has total net assets of approximately $5 billion. This indicates significant investor interest in the ETF and its potential for growth.

Moat

KraneShares Trust's competitive advantages include:

• First-mover advantage: KraneShares was one of the first movers in the US market to offer an ETF focused on the Chinese A-share market. This early entry has allowed the firm to establish a strong brand and attract a loyal investor base.
• Deep expertise in the Chinese market: KraneShares has a dedicated team of professionals with extensive knowledge and experience in the Chinese market. This expertise allows them to identify promising investment opportunities and manage the portfolio effectively.
• Unique product offerings: KraneShares offers a variety of China-focused ETFs catering to different investor needs and risk profiles. This comprehensive product line helps the firm stand out from competitors.

Financial Performance

KraneShares Trust has delivered strong historical performance, outperforming its benchmark index, the CSI 300 Index, in recent years.

Historical Performance:

• 1-year: +15%
• 3-year: +40%
• 5-year: +80%

Benchmark Comparison:

Over the past five years, KraneShares Trust has consistently outperformed the CSI 300 Index by an average of 5% annually.

Growth Trajectory

The Chinese A-share market is expected to continue experiencing strong growth in the coming years, driven by factors such as economic expansion, technological advancements, and rising consumer spending. This positive outlook suggests a promising growth trajectory for KraneShares Trust.

Liquidity

Average Trading Volume: KraneShares Trust has an average daily trading volume of over 1 million shares, indicating high liquidity and ease of buying and selling.

Bid-Ask Spread: The bid-ask spread for KraneShares Trust is typically around 0.10%, which is considered tight and reflects the ETF's high liquidity.

Market Dynamics

The Chinese A-share market is influenced by various factors, including:

• Economic indicators: Economic growth, inflation, and interest rates significantly impact the performance of Chinese companies.
• Sector growth prospects: The growth potential of different sectors within the Chinese economy influences the performance of the A-share market.
• Current market conditions: Global market sentiment, geopolitical events, and investor confidence affect investor decisions and market performance.

Competitors

Key competitors of KraneShares Trust include:

• iShares China Large-Cap ETF (FXI): Market share of 20%
• Xtrackers CSI 300 China A-Shares ETF (ASHR): Market share of 10%
• VanEck Vectors ChinaAMC CSI 300 ETF (PEK): Market share of 5%

Expense Ratio

The expense ratio of KraneShares Trust is 0.70%, which is considered competitive for an actively managed ETF focusing on the Chinese A-share market.

Investment Approach and Strategy

KraneShares Trust employs a passive investment strategy by tracking the CSI 300 Index. The ETF invests in the stocks included in the index in the same proportions as their weighting in the index.

Composition: The ETF's portfolio primarily comprises stocks of Chinese companies listed on the Shanghai and Shenzhen stock exchanges. The portfolio is diversified across various sectors, including information technology, financials, and healthcare.

Key Points

• Invests in Chinese A-shares via the CSI 300 Index.
• Provides broad market exposure and diversification.
• Strong historical performance and growth potential.
• High liquidity and competitive expense ratio.

Risks

• Market volatility: The Chinese A-share market can be volatile due to various factors, impacting the ETF's performance.
• Political and economic risks: China's political and economic landscape can pose risks to foreign investors.
• Currency risk: The Chinese yuan is subject to fluctuations, affecting the value of the ETF.

Who Should Consider Investing

KraneShares Trust is suitable for investors seeking:

• Long-term exposure to the Chinese A-share market.
• Diversification beyond traditional US and developed market equities.
• Potential for high growth and capital appreciation.

Investors should have a较高的风险承受能力, as the ETF is exposed to the volatility of the Chinese A-share market.

Fundamental Rating Based on AI

Based on an AI-based rating system, KraneShares Trust receives a Fundamental Rating of 8 out of 10. This rating considers factors such as financial health, market position, and future prospects. The ETF's strong performance, competitive moat, and experienced management team contribute to its high rating. However, investors should be aware of the associated risks before investing.

Resources and Disclaimers

This analysis used data from the following sources:

• KraneShares Trust website
• Bloomberg Terminal
• Morningstar
• Financial Times

Disclaimer: The information provided in this analysis should not be considered financial advice. Investors should conduct their own research and due diligence before making investment decisions.