ETF investors looking for growth and innovation in China, can turn to the KraneShares Krane China Innovation Strategy.
The strategy consists of a model portfolio that seeks to provide investors exposure to themes that capture China’s innovation in science and technology. In particular, the strategy looks at sector-specific opportunities to take advantage of China’s rapid expansion when it comes to the internet, healthcare, clean technology, and 5G.
The strategy incorporates five KraneShares ETFs and provides a suggested allocation:
- KraneShares CSI China Internet ETF (KWEB): 30%
- KraneShares MSCI All China Health Care Index ETF (KURE): 25%
- KraneShares MSCI China Clean Technology Index ETF (KGRN): 20%
- KraneShares CICC China 5G & Semiconductor ETF (KFVG): 15%
- KraneShares SSE STAR Market 50 Index ETF (KSTR): 10%
“With so much growth and innovation coming from various sectors in China, we are excited to launch the Krane China Innovation Strategy to help investors achieve an efficient portfolio approach to China innovation,” said Jonathan Shelon, Chief Operating Officer of KraneShares, in a press release.
What’s In Each Fund?
With the exponential rise in internet usage during the pandemic, there’s no questioning the heavy allocation in KWEB. The fund seeks to provide investment results that generally correspond to the price and yield performance of a specific foreign equity securities benchmark which is the CSI Overseas China Internet Index.
Healthcare also saw strength, which makes funds like KURE a prime play. KURE invests in a variety of publicly traded shares of Chinese issuers, including A-Shares, B-Shares, H-Shares, P-Chips, and Red Chips – the portfolio essentially includes companies listed on mainland China, Hong Kong, and the United States. The Chinese healthcare companies must be classified under the Global Industry Classification Standard.
Next up is clean energy with KGRN, which seeks to provide investment results that correspond to the price and yield performance of MSCI China IMI Environment 10/40 Index. The underlying index is a modified, free float adjusted market capitalization weighted index designed to track the equity market performance of Chinese companies that derive at least a majority of their revenues from environmentally beneficial products and services, as determined by MSCI Inc.
KFVG seeks to provide investment results that correspond generally to the price and yield performance of a specific equity securities index, the CICC China 5G and Semiconductor Leaders Index. The index includes the stocks and depositary receipts of the top 30 companies by free float market capitalization of Chinese companies engaged in 5G and Semiconductor-Related Industries.
Lastly, KSTR seeks to provide investment results that correspond to the SSE Science and Technology Innovation Board 50 Index. The underlying index includes the stocks and depositary receipts of the top 50 companies by free float market capitalizations that are listed on the SSE Science and Technology Innovation Board.
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