A growing number of exchange traded funds eschew the old way of doing business when it comes to emerging markets funds, opting to focus less on controversial state-run enterprises and other traditional emerging markets ETF fare and more on areas of future growth.
One of those new ETFs with a different spin on emerging markets investing is the KraneShares FTSE Emerging Markets Plus ETF (BATS: KEMP). KEMP, which debuted last month, can lay claim to being the first diversified emerging markets ETF that includes China’s A-shares. The KraneShares FTSE Emerging Markets Plus ETF also features exposure to China N-shares. [Finally, an Emerging Markets ETF With A-Shares]
“The top five emerging markets ETFs by assets under management (AUM) have a total of $88 billion AUM according to Bloomberg as of 2/25/2015. In 2014, none of the indices these five track had exposure to onshore China equities1 the best performing country equity market in 2014,” according to KraneShares.
KEMP A-shares advantage is not to be overlooked, not when China onshore equities have soared. Over the past year, the Deutsche X-trackers Harvest CSI 300 China A-Shares Fund (NYSEArca: ASHR), Market Vectors ChinaAMC A-Share ETF (NYSEArca: PEK)and the KraneShares Bosera MSCI China A ETF (NYSEArca: KBA) are up an average of over 55% while the iShares China Large-Cap ETF (NYSEArca: FXI), home to many of Chinese stocks found in traditional emerging markets ETFs, is up just 20%.
“Including onshore China equities (China A Shares) in an emerging markets or international portfolio could have been additive to performance over the past 12 months. The indices the top five emerging markets ETFs track do not include onshore China equities,” notes KraneShares.[More in Store for A-Shares ETFs]
KEMP, the newest KraneShares ETF, tracks the FTSE Emerging GDP Weighted index. The GDP-weighted index is a combination of securities from three different underlying index series:The FTSE Emerging Index, part of the FTSE Global Equity Index Series, FTSE China A Index, including A-shares and the FTSE China Overseas Index, including N-shares and S-chips,according to FTSE.
“KEMP can also purchase KBA to give investors exposure to both the Shanghai and Shenzhen stock exchanges. KraneShares waives all fees on KBA for investors who purchase it as a holding in KEMP,” said KraneShares.