Daily ETF Watch: KraneShares’ EM Fund

August 20, 2014

KraneShares expands its horizons to other emerging markets besides China.

New paperwork from KraneShares suggests the ETF provider is looking to step outside its comfort zone, while ProShares is prepping an international dividend ETF for launch later this week.

KraneShares Plans EM Fund

A recent filing from ETF provider KraneShares represents a decided shift in direction by the firm.

KraneShares is a fairly new issuer, arriving on the scene in July 2013 with the launch of the KraneShares CSI New China ETF (KFYP | D-27). KraneShares’ stated goal is to provide investors with “ETFs for the next wave of China’s development,” and that has been reflected in its launches and filings.

In addition to KFYP, the firm has also rolled out the KraneShares Bosera MSCI China A Shares ETF (KBA) and the KraneShares CSI China Internet ETF (KWEB | B-22), and it has a raft of China-focused ETFs still in registration covering both the fixed income and equity spaces.

The KraneShares FTSE Emerging Markets Plus ETF will track large- and midcap components of FTSE’s emerging markets indexes, including the broad FTSE Emerging Markets benchmark as well as the FTSE China A Index and FTSE China Overseas Index, the prospectus said.

That means that not only will the fund target “traditional” emerging markets, as defined by FTSE, it will cover China’s A-share market—which FTSE does not include in its main indexes due to its restricted nature—and China stocks that are listed on developed exchanges.

The China A-share exposure will be achieved by investing in KBA, the filing indicated. As of June 30, 2014, China had the heaviest weighting of any country in the index at 30.6 percent, followed by Taiwan (12 percent), Brazil (11.2 percent), India (9 percent), South Africa (8 percent) and Russia (5 percent).

The filing did not include a ticker or expense ratio, but it noted the fund was slated to list on the NYSE Arca exchange.

ProShares Preps EFAD

A communique from the NYSE announced that ProShares will be rolling out the ProShares MSCI EAFE Dividend Growers ETF (EFAD) on Thursday, Aug. 21.

Although best known for its leveraged and inverse funds, ProShares also has a sizable lineup of alternative ETFs, including the dividend-focused ProShares S&P 500 Aristocrats ETF (NOBL | B-61).

EFAD’s underlying index is derived from the MSCI EAFE Index. It selects components of the broad benchmark that have increased their dividend payments steadily for at least a decade, the summary prospectus noted. The methodology targets a minimum of 40 components, which it equally weights; sectors are capped at 30 percent of the total index.

EFAD will come with an expense ratio of 0.50 percent.

 

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