With a weight of 17.1%, India is the only other country to receive a double-digit allocation in KEMP and the new ETF’s India weight is 460 basis points higher than VWO’s. Conversely, KEMP’s 4.3% weight to Brazil is less than half VWO’s allocation to Latin America’s largest economy.
KEMP’s largest holding is KraneShares Bosera MSCI China A ETF (NYSEArca: KBA), which accounts for nearly 25% of the new ETF’s weight. Other top 10 holdings include familiar names such as Tata Motors (NYSE: TTM), Infosys (NasdaqGS: INFY) and Baidu (NasdaqGS: BIDU).
One reason A-shares equities have risen in popularity among global institutional investors is reduced correlations to developed and emerging markets stocks.
“An interesting data point to highlight is the lack of correlation the China A market has to other Chinese markets. 11% of the names in MSCI China A are dually listed on the Hong Kong Stock Exchange (Chinese stocks listed on the Hong Kong exchange are commonly referred to as H-Shares). In looking at periods of market stress we find the disconnect between the H-Share and A-Share market noteworthy,” according to KraneShares.
From Sept. 30, 2003 through Sept. 30, 2014, the MSCI China A Index, KBA’s underlying benchmark, had a correlation of just 0.28 to the MSCI Emerging Markets Index and just 0.17 to the MSCI EAFE Index, according to KraneShares data.
KEMP Country Breakdown
Charts Courtesy: KraneShares