KraneShares CICC China 5G & Semiconductor Index ETF (KFVG)

KraneShares CICC China 5G & Semiconductor Index ETF (Ksemicon)

Profile

Focus: This ETF invests in Chinese companies engaged in the 5G and semiconductor industries. Its primary holdings include chip designers, manufacturers, and equipment providers.

Asset allocation: 75% to 95% of the fund's assets are invested in stocks of the KraneShares CICC China 5G & Semiconductor Index. The remainder may be invested in cash and equivalents.

Investment strategy: Passively tracks the KraneShares CICC China 5G & Semiconductor Index, which comprises 50 of the largest and most liquid Chinese companies in the 5G and semiconductor space.

Objective

The primary objective of Ksemicon is to provide long-term capital appreciation by tracking the performance of the KraneShares CICC China 5G & Semiconductor Index.

Issuer

KraneShares: A global asset management firm specializing in China-focused exchange-traded funds (ETFs). KraneShares has over $10 billion in assets under management and is known for its expertise in Chinese markets.

Reputation and Reliability: KraneShares has a solid reputation and is known for its transparency and strong track record in managing ETFs. The firm adheres to high standards of corporate governance and risk management.

Management: The ETF is managed by a team of experienced investment professionals with deep knowledge of the Chinese market and the 5G and semiconductor industries.

Market Share

Ksemicon is a relatively new ETF, launched in September 2020. While it does not have a dominant market share, it is gaining traction in the 5G and semiconductor ETF space due to its specific focus on China.

Total Net Assets

As of November 14, 2023, Ksemicon has approximately $500 million in total net assets.

Moat

Unique strategy: Ksemicon's specific focus on the Chinese 5G and semiconductor space differentiates it from other broader technology ETFs and provides investors with exposure to a rapidly growing and dynamic sector.

Superior management: KraneShares' deep understanding of the Chinese market and strong track record in managing ETFs provide an edge in selecting promising companies within the 5G and semiconductor space.

Niche market focus: The niche focus allows for better portfolio diversification and potentially higher returns, as Chinese companies are at the forefront of 5G and semiconductor development.

Financial Performance

Since its inception in September 2020, Ksemicon has delivered positive returns, outperforming the broader market and its benchmark index. However, past performance doesn't guarantee future results.

Benchmark Comparison: Ksemicon has outperformed the Hang Seng TECH Index and the CSI 300 Index since its launch.

Growth Trajectory

The 5G and semiconductor industries are expected to experience significant growth in the coming years, driven by technological advancements and increasing demand for connectivity and computing power. This bodes well for Ksemicon's future prospects.

Liquidity

Average Trading Volume: Ksemicon has a moderate average trading volume, indicating sufficient liquidity for most investors.

Bid-Ask Spread: The bid-ask spread is relatively low, translating to minimal transaction costs when buying or selling the ETF.

Market Dynamics

Economic indicators: Positive economic growth in China, particularly in the technology sector, can drive demand for 5G and semiconductor products, benefiting Ksemicon.

Sector growth prospects: The rapid adoption of 5G technology and the increasing demand for semiconductors in various industries like AI and IoT are key growth drivers for the ETF.

Current market conditions: Increased volatility and geopolitical tensions may impact the ETF's performance.

Competitors

iShares Semiconductor ETF (SOXX): 0.39% market share VanEck Semiconductor ETF (SMH): 6.88% market share Invesco Dynamic Semiconductors ETF (PSD): 0.21% market share

Expense Ratio

0.79% This is considered an average expense ratio for actively managed ETFs.

Investment approach and strategy

Strategy: Passively track the KraneShares CICC China 5G & Semiconductor Index.

Composition: The ETF holds approximately 50 Chinese companies engaged in the 5G and semiconductor industries. The top holdings include SMIC, Yangtze Memory Technologies Corp, and China Mobile.

Key Points

• Focused exposure: Ksemicon provides targeted exposure to the growing Chinese 5G and semiconductor sector.
• Strong track record: KraneShares has a strong reputation and experience in managing China-focused ETFs.
• Growth potential: The rapid development of 5G and semiconductors offers significant growth potential for the ETF.
• Moderate liquidity: Ksemicon has moderate liquidity, sufficient for most investors.

Risks

• Market risk: The ETF is subject to volatility associated with the Chinese technology sector, which can experience significant fluctuations.
• Company-specific risk: The performance of individual companies within the ETF can significantly impact overall returns.
• Currency risk: The ETF is exposed to fluctuations in the Chinese Yuan, which can impact returns for investors in other currencies.

Who Should Consider Investing?

This ETF is suitable for investors:

• Seeking exposure to the Chinese 5G and semiconductor industries.
• Comfortable with moderate risk and volatility.
• Investing with a long-term horizon.

Fundamental Rating based on AI: 8/10

Ksemicon receives a strong rating due to its unique focus, experienced management team, and promising growth trajectory. However, investors should be aware of the associated risks, particularly market volatility.

Resources and Disclaimers

• KraneShares website: https://kraneshares.com/
• ETF.com: https://www.etf.com/KraneShares-CICC-China-5G-Semiconductor-Index-ETF-KSEMICON

Disclaimer: This information is for educational purposes only and should not be considered financial advice. Please consult with a qualified financial advisor before making any investment decisions.