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KraneShares, a newly launched provider of China-focused exchange-traded funds (ETFs), has unveiled its debut fund, the KraneShares CSI China Five-Year Plan ETF (KFYP), offering a unique strategy for gaining exposure to China.
The NYSE Arca-listed ETF provides exposure to China via the CSI Overseas China Five-Year Plan Index, an index which focuses on companies in the targeted sectors of China’s ‘Five-Year Plan’.
Every five years China announces its fiscal and domestic spending plans in a document known as the Five-Year Plan. The spending is typically concentrated around key themes and in turn highlights a number of priority industries. These priority industries are singled out to receive special attention and invariably enhanced investment.
In the latest plan, the priority industries were new energy, energy conservation and environmental protection, biotechnology, new materials, new information technology, high-end equipment manufacturing, and clean energy vehicles.
The CSI Overseas China Five-Year Plan Index targets these industries by only including constituents from the materials, industrials, consumer discretionary, consumer staples, health care, internet software & services, semiconductors, and new energy producers sectors. This contrasts with the majority of broad-market China indices, which tend to be dominated by mostly state-owned enterprises in the financial, energy and telecom sectors.
Brendan Ahern, Managing Director of KraneShares, said: “Many US investors have little or no exposure to China, the second largest economy in the world. When they do invest in China directly or through broad emerging market exposure, many investment strategies provide a narrower representation of the Chinese economy due to their heavy weights in financials and energy. The KraneShares CSI China Five-Year Plan ETF provides investors with an opportunity to align themselves directly with China’s current domestic investment initiatives”
He added: “We endeavour to deliver compelling Chinese investment opportunities to the US marketplace. We are proud to partner with China Securities Index Co. of Shanghai, as the index provider for this ETF.”
Dr Zhigang Ma, General Manager of China Securities Index Co., said: “We believe the China markets offer an excellent opportunity for US investors’ portfolios. The Five-Year Plan is China’s most important document and governs the direction of 1.3 billion people. We are delighted to partner with KraneShares and NYSE on delivering the KraneShares CSI China Five-Year Plan ETF to US investors.”
The fund has total annual operating expenses of 0.68%.