KraneShares Offers Smart Beta ETF With “All China” Exposure to the “New China” Economy
Krane Funds Advisors, LLC, the investment advisor for KraneShares ETFs (KraneShares), announced its partnership with Zacks Index Services. Zacks provides the index for KraneShares’ newly renamed KraneShares Zacks New China ETF (ticker : KFYP), formerly the KraneShares CSI New China ETF.
“We believe KFYP’s new index has truly transformed the fund into a smart beta access point to the most dynamic companies in China.” said Jonathan Krane, CEO of KraneShares.
Smart beta is an investment style where a manager passively follows an index designed to take advantage of perceived systematic biases or inefficiencies in the market. Smart beta funds typically offer the low cost of a passive ETF, while potentially enhancing returns compared to the performance of a target general market (beta).
KFYP’s new index, the Zack’s New China Index, holds the sectors that the Chinese government has targeted for growth within its newly launched 13th Five Year Plan. These sectors include technology, clean energy, consumer staples, consumer discretionary, and health care.
“As the portfolio manager for KFYP, it has been rewarding for me to pioneer new ground especially in regard to using the Shanghai Hong Kong Stock Connect to access the onshore markets,” said Mark Schlarbaum, Managing Partner at KraneShares. According to Bloomberg as of the end of May 2016, upon switching to the new Zacks index, KFYP became the first U.S.-listed ETF to physically hold Chinese stocks across the Mainland, Hong Kong and U.S. markets.
“Beyond opening up our index to the entire available China investment universe, we took a sector weighted approach to ensure an even exposure to the areas targeted for growth by the government,” said Mitch Zacks, Principal and Senior Portfolio Manager at Zacks Investment Management. “We also limited the index to forty stocks, chosen based off our proprietary methodology that weighs fundamentals, momentum, and market capitalization, which drives the ‘smart beta’ component of KFYP”.
“China’s economy continues to experience tremendous growth even as it shifts focus from manufacturing to domestic consumption,” said Brendan Ahern, Chief Investment Officer of KraneShares. “KFYP aims to provide investors an “all China” exposure to the “new China” sectors of the economy, while at the same time limiting exposure to manufacturing, financials, industrials and heavy materials that defined China’s past economic plans.”
The KraneShares Zacks New China ETF (ticker : KFYP) trades on the New York Stock Exchange and is available for purchase through your brokerage account or financial advisor. For more information visit kraneshares.com/kfyp.