KraneShares launches China internet ETF

Aug 5th, 2013 | By | Category: Equities

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KraneShares, which only last month made its exchange-traded fund (ETF) debut, has launched its second new fund: the KraneShares CSI China Internet ETF (KWEB).

KraneShares launches China internet ETF

KraneShares’ newly launched China internet ETF provides exposure to many of China’s biggest internet brands.

The fund, which has been listed on the Nasdaq Stock Market, provides exposure to Chinese internet and internet-related companies.

Brendan Ahern, Managing Director of KraneShares, said: “KraneShares CSI China Internet ETF provides US investors with an opportunity to gain exposure to China’s growing internet sector with the cost efficiencies of ETF investing.”

Citing a McKinsey & Company report that stated China E-Tailing accounted for $190 billion in sales in 2012 and could reach as much as $650 billion by 2020, he added: “We see two powerful demographic trends driving China’s internet sector: since 2000, internet spending by urban Chinese has increased 14% annually, and China’s rural population continues to migrate to urban areas, further fueling internet usage.”

The fund is linked to the CSI Overseas China Internet Index, an index developed by China Securities Index Co.

Constituents of the index must come from one of the following sectors: Internet Software & Services, which includes companies developing and marketing internet software and/or providing internet services; Home Entertainment Software, which includes manufacturers of home entertainment software and educational software used primarily in the home; Internet Retail, which includes companies providing retail services primarily on the internet; Internet Retail, which includes companies providing commercial services primarily through the internet; and Mobile Internet, which includes companies developing and marketing mobile internet software and/or providing mobile internet services.

Additionally, constituents must have a market capitalisation in excess of $500m and a daily average trading value of at least $500,000. Constituents must also be incorporated and operate in Mainland China and generate at least 50% of their revenue there.

As of launch, major holdings include Baidu.com, Tencent, Qiho 360 Technology, Netease.com, Ctrip.com, Vipshop, Youku.com, Sina, Perfect World and Kingsoft.

Dr Zhigang Ma, General Manager of China Securities Index Co, said: “We believe the China Internet sector offers an excellent opportunity for US investors. There are approximately 600 million internet users in Mainland China. Chinese internet company market capitalisations now rival the largest US and global industry leaders, along with the potential for Chinese internet IPOs to come later this year, this is definitely a sector that warrants attention.”

The launch of the KraneShares CSI China Internet ETF is in-keeping with KraneShares’ focus on China-theme funds and follows the launch of the KraneShares CSI China Five-Year Plan ETF (KFYP) on July 23, 2013. This fund provides exposure to China by focusing on companies operating on the targeted sectors of China’s ‘Five-Year Plan’.

KWEB has total annual fund operating expenses of 0.68%.

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