Branching from its traditionally China-focused ETFs, KraneShares launched two new ETFs on NYSEArca today that are focused on U.S. dividends.
The KFA Small Cap Quality Dividend Index ETF (KSCD) seeks exposure to companies with reliable dividend growth and a strong record of stable cash flows, healthy balance sheets, and durable business models, according to KraneShares. KSCD uses a smart beta strategy and provides dividend growth strategies that can potentially improve performance in down markets.
The fund invests 80% of its assets in the Russell 2000 Dividend Select Equal Weight Index. The index “takes a smart beta approach to investing in U.S. small cap companies,” according to KraneShares. “The strategy seeks to measure the performance of US companies that have successfully increased their dividend payments over a period of ten years.”
The remainder of the assets will be invested in equity securities of issuers whose securities are not components of the underlying index, derivative instruments, other investment companies and cash or cash equivalents, according to the fund’s prospectus.
The second fund, KFA Large Cap Quality Dividend Index ETF (KLCD), is similar and is benchmarked to the Russell 1000 Dividend Select Equal Weight Index. Rather than small cap, this fund’s index takes a smart beta approach to investing in U.S. large cap companies.
Like KSCD, 80% of KLCD’s assets will be invested in the underlying index and the remainder in derivative instruments, other investment companies and cash or cash equivalents, according to the fund’s prospectus.
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