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KRBN

KraneShares Global Carbon ETF

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Investment Strategy:

The KraneShares Global Carbon ETF (the “Fund”) seeks to provide a total return that, before fees and expenses, exceeds that of the IHS Markit Global Carbon Index (the ‘‘Index’’) over a complete market cycle. KRBN is benchmarked to IHS Markit’s Global Carbon Index, which offers broad coverage of cap-and-trade carbon allowances by tracking the most traded carbon credit futures contracts. The index introduces a new measure for hedging risk and going long the price of carbon while supporting responsible investing.

Currently, the index covers the major European and North American cap-and-trade programs: European Union Allowances (EUA), California Carbon Allowances (CCA) and the Regional Greenhouse Gas Initiative (RGGI).

Global Carbon Allowance Market Highlights

  • According to IHS Markit, as of December 31, 2020 the global price of carbon was $24.05 per ton of CO2. It is estimated that carbon allowance prices need to reach $147 per ton of CO2 to meet a 1.5°C global warming limit.2
  • As of December 31, 2020, the three largest global carbon futures markets, tracked by IHS Markit’s Global Carbon Index, had a market size of $260.79 billion.1
  • In April 2019, The Financial Times reported that European carbon allowances within the European Union Emissions Trading System were the world’s top-performing commodity over the past two years.3,4
  • China’s emissions trading market is expected to launch by end of 2020. Once fully implemented, it will be the largest carbon allowance market in the world, which may provide an additional catalyst for the performance of the global carbon allowance market.4

KRBN Features

  • Going long the price of carbon may support responsible investing and incentivize pollution reduction aligned with ESG investment goals.
  • Can provide potential portfolio diversification due to the global carbon futures markets’ historically low correlation to other asset classes.1
  • KRBN may be appropriate for investors who are concerned about the increase in cost of carbon emissions on their portfolios. As the cost of carbon emissions rise, KRBN typically benefits, while companies with heavy carbon footprints typically suffer.3
  • May be a beneficiary of tightening carbon emissions regulation worldwide.

1. IHS Markit, 12/31/2020
2. Financial Times, “Global Carbon Pricing, Too Important to Leave to Governments”, Jul 7, 2021.
3. Financial Times, April 17, 2019 “Niche asset nears mainstream as investors warm to EU carbon market”
4. Past performance of carbon allowance does not indicate future results and may not be indicative of fund performance.

Fund Details

Data as of 09/17/2021
TickerKRBN
Primary ExchangeNYSE
CUSIP500767678
ISINUS5007676787
Net Assets$803,536,596
Total Annual Fund Operating Expense 0.78%
Inception Date7/30/2020
Distribution FrequencyAnnual

Fund Documents

Daily Performance

Data as of 09/17/2021
Premium Discount Chart
NAV
Net Asset Value$39.20 
Daily Change 0.03%
Price
Market Price $0.00 
Daily Change0.00%
30 Day Median Bid/Ask Spread
Value0%

The ETF’s 30 Day Median Bid-Ask Spread is calculated by identifying the ETF’s national best bid and national best offer ("NBBO") as of the end of each 10 second interval during each trading day of the last 30 calendar days and dividing the difference between each such bid and offer by the midpoint of the NBBO. The median of those values is identified and that value is expressed as a percentage rounded to the nearest hundredth.

Performance History

Distributions
Cumulative %
Data as of: 08/31/2021		 Fund NAV Closing Price Index
1 Month11.85% 12.29% 12.35%
3 Month17.25% 15.81% 15.78%
6 Month48.22% 46.47% 49.15%
Since Inception97.80% 99.20% 97.40%
Avg Annualized %
Data as of month end: 08/31/2021		 Fund NAV Closing PriceIndex
1 Year84.00% 82.17% 84.08%
Since Inception87.11% 88.32% 86.58%
Avg Annualized %
Data as of quarter end: 06/30/2021		 Fund NAV Closing Price Index
Since Inception– – 91.61%
Growth of $10,000
Data as of 09/16/2021

The performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when sold or redeemed, may be worth more or less than their original cost and current performance may be lower or higher than the performance quoted.

The Growth of $10,000 chart reflects an initial investment of $10,000 on the day prior to the selected time period and assumes reinvestment of dividends and capital gains. For the growth of $10,000 chart since inception, the initial investment of $10,000 is instead made on the inception date of the Fund. Fund expenses, including management fees and other expenses were deducted. The growth of a $10,000 investment in the fund is hypothetical and for illustration purposes only.

Carbon Allowance Futures

Data as of 09/17/2021
Name Identifier Position Current Exposure($) % NAV
European Union Allowance (EUA) 2021 Future MOZ21 Comdty 7812 544,989,188 67.82%
California Carbon Allowance (CCA) Vintage 2021 Future ZCAZ21 Comdty 5062 131,612,000 16.38%
Regional Greenhouse Gas Initiative (RGGI) Vintage 2021 Future ZRDZ21 Comdty 6077 59,129,210 7.36%
European Union Allowance (EUA) 2022 Future MOZ22 Comdty 650 45,605,210 5.68%
California Carbon Allowance (CCA) Vintage 2022 Future CTIZ22 Comdty 1204 32,652,480 4.06%
813,988,087 101%

Collateral and Currency Management

Data as of 09/17/2021
Name Identifier Position Current Exposure($) % NAV
EURO EUR 449,268,957 527,304,793 65.62%
USD Cash & Equivalents** USD 156,443,352 156,443,352 19.47%
Euro FX Futures ECZ1 Curncy 523 76,809,088 9.56%
SCHWAB SHORT-TER SCHO 694,950 35,595,339 4.43%
796,152,572 99%

Holdings, carbon allowance futures, and collateral are subject to change.
**Includes USD cash deposits & cash in margin accounts ($233,252,440), and implied short USD exposure from Euro FX futures

Carbon Allowance Futures Breakdown

Data as of: 09/17/2021
EUA 2021 Future 67.8%
CCA 2021 Future 16.4%
RGGI 2021 Future 7.4%
EUA 2022 Future 5.7%
CCA 2022 Future 4.1%

Currency Exposure
Breakdown

Data as of: 09/17/2021
EUR 75.2%
USD 23.9%

Top 10 Holdings

Data as of 09/17/2021
Full Holdings .CSV
Rank Company Name % of Net Assets Ticker Identifier Type Shares Held Market Value($) Notional Value($)
1 EURO 64.83% – – Currency 449,268,957 527,304,793 0
2 Cash 24.12% – – Cash 196,187,865 196,187,865 0
3 SCHWAB SHORT-TER 4.38% SCHO US8085248628 Mutual Fund 694,950 35,595,339 0
4 EURO 3.60% – – Currency 24,961,331 29,296,993 0
5 B 07/14/22 3.07% – US912796K576 Treasury Bill 25,000,000 24,986,594 0
6 CA CARBON ALLOW 21DEC21 0.00% ZCAZ21 – Future 5,062 0 131,612,000
7 CA CARBON ALLOW 21DEC22 0.00% ZCAZ22 – Future 1,204 0 32,652,480
8 ECX EMISSION DEC21 0.00% MOZ21 – Future 7,812 0 545,366,557
9 ECX EMISSION DEC22 0.00% MOZ22 – Future 650 0 45,636,788
10 EURO FX CURR FUT DEC21 0.00% ECZ1 – Future 523 0 76,809,088

Holdings are subject to change.

Related Content:

Topics

©2021 Krane Funds Advisors, LLC
280 Park Avenue, 32nd Floor, New York, NY 10017

Carefully consider the Funds' investment objectives, risk factors, charges and expenses before investing. This and additional information can be found in the Funds' full & summary prospectus, which may be obtained here: KWEB, KBA, KURE, KFYP, KGRN, KALL, KBND, KHYB, OBOR, KARS, KEMQ, KMED, KEMX, KESG, KFVG, KBUY, KSTR, KRBN, KTEC. Read the prospectus carefully before investing. Please note these links also contain the Funds' top ten holdings, performance, and other important information.

Risk Disclosures:

Investing involves risk, including possible loss of principal. There can be no assurance that a Fund will achieve its stated objectives.

The Funds are subject to political, social or economic instability within China which may cause decline in value. Fluctuations in currency of foreign countries may have an adverse effect to domestic currency values. Emerging markets involve heightened risk related to the same factors as well as increase volatility and lower trading volume.

The Funds may invest in derivatives, which are often more volatile than other investments and may magnify the Funds’ gains or losses. A derivative (i.e., futures/forward contracts, swaps, and options) is a contract that derives its value from the performance of an underlying asset. The primary risk of derivatives is that changes in the asset's market value and the derivative may not be proportionate, and some derivatives can have the potential for unlimited losses. Derivatives are also subject to liquidity and counterparty risk.

The Funds are subject to liquidity risk, meaning that certain investments may become difficult to purchase or sell at a reasonable time and price. If a transaction for these securities is large, it may not be possible to initiate which may cause the Fund to suffer losses.

Narrowly focused investments typically exhibit higher volatility. The Funds' assets are expected to be concentrated in an industry or group of industries to the extent that the Underlying Index concentrates in a particular industry or group of industries. The securities of companies in an industry or group of industries could react similarly to market developments. Thus, the Funds are subject to loss due to adverse occurrences that affect one industry or group of industries or sector. KWEB, KURE, KFYP, KGRN, KBND, KHYB, KMED, KESG, KFVG, KBUY, KSTR, KRBN, and KTEC are non-diversified.

The ability of KBA, KALL, OBOR, KEMQ, KARS, KURE, KMED, KBUY, KSTR, KESG and KTEC to achieve their respective investment objectives is dependent, in part, on the continuous availability of A Shares and the ability to obtain, if necessary, additional A Shares quota. If a Fund is unable to obtain sufficient exposure to limited availability of A Share quota, the Fund could seek exposure to the component securities of the Underlying Index by investment in other types of securities.

KBND and KHYB are subject to interest rate risk, which is the chance that bonds will decline in value as interest rates rise. The Funds may invest in high yield and unrated securities, whose prices are generally more sensitive to adverse economic changes and consequently more volatile. The Funds are subject to sovereign and quasi-sovereign debt risk. The governmental authority that controls sovereign and quasi-sovereign debt repayment may be unwilling or unable to repay the principal and/or interest when due.

KBND may invest in perpetual bonds, which offer fixed returns with no maturity date. Perpetual bonds can be more volatile than other types of bonds that have a maturity date and may be more sensitive to changes to interest rates. The components of the securities held by KBND will be rated by Chinese credit rating agencies, which may use different criteria and methodologies than U.S. entities or international credit rating agencies. KBND depends on the CIBM Program to invest directly in RMB Bonds. There is no guarantee the Fund will be able to continue to participate in the program.

KBND is subject to sovereign and quasi-sovereign debt risk. The governmental authority that controls the repayment of sovereign and quasi-sovereign debt may be unwilling or unable to repay the principal and/or interest when due.

KGRN and KESG may underperform other similar funds that do not consider conscious company/ESG guidelines when making investment decisions.

KSTR and KTEC may invest in Initial Public Offerings (IPOs). Securities issued in IPOs have no trading history, and information about the companies may be available for very limited periods. In addition, the prices of securities sold in IPOs may be highly volatile. In addition, as the Fund increases in size, the impact of IPOs on the Fund’s performance will generally decrease.

KRBN relies on the existence of cap and trade regimes. There is no assurance that cap and trade regimes will continue to exist, or that they will prove to be an effective method of reduction in GHG emissions. Changes in U.S. law and related regulations may impact how the way the Fund operates, increase Fund costs and/or change the competitive landscape. Funds may underperform other similar funds that do not consider conscious company/ESG guidelines when making investment decisions.

KRBN invests through a subsidiary and is indirectly exposed to the risks associated with the respective Subsidiary’s investments. Since the Subsidiary is organized under the law of the Cayman Islands and is not registered with the SEC under the Investment Company Act of 1940, as such the Fund will not receive all of the protections offered to shareholders of registered investment companies.

KRBN and its subsidiary will be considered commodity pools upon commencement of operations, and will be subject to regulation under the Commodity Exchange Act and CFTC rules. Commodity pools are subject to additional laws, regulations and enforcement policies, which may increase compliance costs and may affect the operations and performance of the Fund and the Subsidiary. Futures and other contracts may have to be liquidated at disadvantageous times or prices to prevent the Fund from exceeding any applicable position limits established by the CFTC.

The value of a commodity-linked derivative investment typically is based upon the price movements of a physical commodity and may be affected by changes in overall market movements, volatility of the Index, changes in interest rates, or factors affecting a particular industry or commodity.

Investments in non-U.S. instruments may involve risk of loss due to foreign currency fluctuations and political or economic instability. The Fund’s assets are expected to be concentrated in an industry or group of industries to the extent that the Index concentrates in a particular industry or group of industries.

Indices are unmanaged and do not include the effect of fees. One cannot invest directly in an index.

Fund shares are bought and sold on an exchange at market price (not NAV) and are not individually redeemed from the Fund. However, shares may be redeemed at NAV directly by certain authorized broker-dealers (Authorized Participants) in very large creation/redemption units. The returns shown do not represent the returns you would receive if you traded shares at other times. Shares may trade at a premium or discount to their NAV in the secondary market. Brokerage commissions will reduce returns. Beginning 12/23/2020, market price returns are based on the official closing price of an ETF share or, if the official closing price isn't available, the midpoint between the national best bid and national best offer ("NBBO") as of the time the ETF calculates the current NAV per share. Prior to that date, market price returns were based on the midpoint between the Bid and Ask price. NAVs are calculated using prices as of 4:00 PM Eastern Time.

The KraneShares ETFs are distributed by SEI Investments Distribution Company (SIDCO), 1 Freedom Valley Drive, Oaks, PA 19456, which is not affiliated with Krane Funds Advisors, LLC, the Investment Adviser for the Funds, or any sub-advisers for the Funds.

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