Thursday, April 20, 2017

Featured Speaker: Brendan Ahern, Chief Investment Officer, KraneShares

Thursday, April 20, 2017 - Featured Speaker Series - This specialized blog series highlights dynamic speakers from the most recent ETP Forum and offers a window into the insight that they share with the attendees. As the speaking faculty continues to offer thought leadership on cutting-edge investment strategies, we use this feature to supplement the event’s panel discussions and share the full breadth of select speaker’s insights – we hope that you enjoy this special series of posts.

Each Fall and Spring we chair The ETP Forum which features some of the brightest minds in Capital Management who have consistently advanced new thought leadership in the arena of Exchange-Traded-Products. Today, we feature Brendan Ahern, Chief Investment Officer of KraneShares, who recently served as a panelist on the Smart Beta panel at the Spring 2017 ETP Forum on Friday, April 7th at The New York Athletic Club.

Smart Beta strategies are soaring in popularity and now span just about all asset classes, sectors, geographies and investment factors. As investor adoption increases and Smart Beta products continue to proliferate, the need to differentiate within this category will only increase. KraneShares, a pioneer in China-focused ETFs, clearly understands this and illuminated their unique position within the Smart Beta space during the panel.

Despite the profusion of product offerings now available to investors, Smart Beta access to international markets remains limited. This is particularly true for the world’s second largest economy, China, which is notorious for its restrictions on foreign investors. Against this backdrop, KraneShares occupies a truly unique position within the Smart Beta landscape, with its innovative suite of Chinese ETFs.

KraneShares is one of only a select few ETF providers licensed to hold China A-shares as a Renminbi Qualified Foreign Institutional Investor (RQFII). Coincidentally, Brendan’s discussion on Smart Beta and opportunities that exist for investors in China coincided with KraneShares’ three-year anniversary of its pioneering KraneShares Bosera MSCI China A Share ETF (KBA). With a 5.44 ETFG Green Diamond Reward Score and over $56.9 million in AUM, KBA has steadily attracted interest from investors seeking exposure to the world’s second largest economy.

KBA breaks down barriers to investors by providing access to the Shanghai and Shenzhen Stock Exchanges, which are traditionally not available to U.S. investors. KBA's holdings are composed of the Mainland Chinese equities scheduled for inclusion into the widely-followed MSCI emerging markets indexes. With $1.6 trillion benchmarked to the affected indexes, full inclusion of Onshore Chinese equities could see significant flows into the securities KBA owns today.

Aside from providing entry to the difficult-to-access Chinese A Shares market, KraneShares also manages an innovative “all China” Smart Beta strategy with exposure to the "new China" economy. The KraneShares Zacks New China ETF (KFYP) is focused on those sectors/industries highlighted in China's Five Year Plan (FYP) which includes Technology, Consumer Staples, Consumer Discretionary and Healthcare. As China undergoes its transformation from a manufacturing-heavy to a consumer-driven economy, KFYP investors may stand to benefit by being underweighted in Manufacturing, Financials, Industrials and Heavy Materials that defined China’s past economic plans.

The sectors expected to benefit from the plan are evaluated and the stocks within each sector are subsequently ranked based on various investment factors, including price, cash flow, free cash flow, momentum and volatility. KFYP maintains a balanced market capitalization exposure to Large Cap, Mid Cap and Small Cap Chinese companies trading in Mainland China, Hong Kong and the United States. With its Smart Beta Access to the fastest-growing segment of the Chinese economy, KFYP offers investors an opportunity not found in other funds in the marketplace.

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