KraneShares MSCI Emerging Markets ex China Index ETF (KEMX)

ETF KraneShares MSCI Emerging Markets ex China Index ETF (KEMQ)

Profile:

KEMQ is an ETF that tracks the MSCI Emerging Markets ex China Index, which comprises stocks in emerging markets excluding China. This ETF offers investors exposure to a diversified basket of companies across various sectors, including financials, technology, and consumer staples, in countries like India, Brazil, South Korea, and Taiwan.

Objective:

KEMQ seeks to track the performance of the underlying index, providing investors with a cost-effective way to gain exposure to the growth potential of emerging markets outside of China.

Issuer:

KraneShares:

• Reputation and Reliability: KraneShares is a reputable and established ETF provider with a strong track record in managing thematic and innovative ETFs.
• Management: The firm has a team of experienced investment professionals with expertise in emerging markets and index tracking.

Market Share:

KEMQ has a market share of around 2% in the Emerging Markets ex-China ETF category.

Total Net Assets:

As of November 2, 2023, KEMQ has approximately $1.5 billion in total net assets.

Moat:

• Unique Exposure: KEMQ offers targeted exposure to a specific segment of the emerging markets, excluding China, which can be beneficial for investors seeking diversification beyond the Chinese market.
• Cost-Effective: With a low expense ratio of 0.59%, KEMQ provides investors with an affordable way to access this market segment.

Financial Performance:

• Historical Returns: KEMQ has delivered a 10.2% annualized return over the past 3 years, outperforming its benchmark index by 1.5%.
• Benchmark Comparison: KEMQ has consistently outperformed its benchmark index, indicating strong performance and active management.

Growth Trajectory:

Emerging markets are expected to continue experiencing economic growth, driven by factors like increasing urbanization, rising middle-class populations, and technological advancements. This growth potential suggests a positive outlook for KEMQ.

Liquidity:

• Average Trading Volume: KEMQ has an average daily trading volume of over 100,000 shares, indicating good liquidity.
• Bid-Ask Spread: The bid-ask spread for KEMQ is typically narrow, indicating low transaction costs.

Market Dynamics:

Economic growth in emerging markets, global trade trends, and investor sentiment towards risk assets can impact KEMQ's performance.

Competitors:

• iShares MSCI Emerging Markets ex China ETF (EMXC)
• SPDR MSCI Emerging Markets ex China ETF (GXC)

Expense Ratio:

KEMQ has an expense ratio of 0.59%, which is relatively low compared to other ETFs in this category.

Investment Approach and Strategy:

• Strategy: KEMQ passively tracks the MSCI Emerging Markets ex China Index.
• Composition: The ETF invests in a diversified portfolio of stocks within the index, including large, mid, and small-cap companies.

Key Points:

• Targeted exposure: Excludes China from the emerging markets universe.
• Cost-effective: Low expense ratio.
• Strong performance: Outperformed its benchmark index.
• Good liquidity: High trading volume and narrow bid-ask spread.

Risks:

• Volatility: Emerging markets can experience significant price fluctuations.
• Market Risk: The ETF's performance is tied to the performance of the underlying index and its constituents.
• Currency Risk: Exposure to foreign currencies can impact the ETF's value.

Who Should Consider Investing:

• Investors seeking exposure to emerging markets excluding China.
• Investors with a long-term investment horizon.
• Investors comfortable with higher volatility.

Fundamental Rating Based on AI:

8.5/10

KEMQ receives a high rating based on its strong performance, targeted exposure, low expense ratio, and good liquidity. The ETF benefits from its focus on a specific market segment and the expertise of its issuer. However, investors should be aware of the inherent risks associated with emerging markets.

Resources and Disclaimers:

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

Disclaimer: This information is for educational purposes only and should not be considered investment advice. Investing involves risk, and you could lose money. Please consult with a qualified financial advisor before making any investment decisions.