A-Share Inclusion Update: KraneShares KBA ETF Moves to MSCI China A Index

News provided by

Krane Funds Advisors, LLC

Jun 17, 2019, 09:45 ET

NEW YORK, June 17, 2019 /PRNewswire/ -- Krane Funds Advisors, LLC, ("KraneShares") announced the benchmark for the KraneShares Bosera MSCI China A Share ETF (Ticker: KBA) has broadened its investment mandate by adopting the MSCI China A Index as of May 31, 2019.

The move occurred the same day that leading global index provider, MSCI, completed the first step of the three-step 2019 inclusion process of Shanghai and Shenzhen listed securities (A-Shares) into their Global Standard Indexes. By the end of 2019, MSCI's definition of China will include 264 large-cap and 172 mid-cap A-Share securities, including 30 securities from the ChiNext board; increasing the inclusion factor from 5% to 20%1.

"When looking at the inclusion process, we realized that the MSCI China A Inclusion Index will converge with the MSCI China A Index following the upcoming November introduction of mid-cap securities," said Brendan Ahern CIO of KraneShares. "By moving to track the MSCI China A Index, KBA has accelerated the three-step process into a single step, gaining full potential diversification benefits immediately."

The MSCI China A Index captures large and mid-cap equities listed on the Shanghai and Shenzhen stock exchanges and reflects a 20% inclusion factor for China A large-cap, mid-cap, and eligible ChiNext shares2. There are a total of 436 constituents3 giving investors diverse exposure to A-Shares. Additionally, on March 11, 2019, the Hong Kong Stock Exchange announced a license agreement with MSCI to introduce futures contracts on the MSCI China A Index4 – KBA's new benchmark. KBA has the longest track record for an MSCI-linked China A Share ETF in the United States5.

"The MSCI China A Index provides strategic exposure to the investment opportunity in Mainland China," said Jonathan Krane CEO of KraneShares. "With $1.8 trillion6 tracking the MSCI EM Index alone, the MSCI inclusion could trigger significant institutional flows from both passive and active managers into the A-Share securities the KraneShares Bosera MSCI China A-Share ETF (Ticker: KBA) holds today."

For more information visit KraneShares.com/KBA.

  1. MSCI, "MSCI Will Increase the Weight of China A Shares in MSCI Indexes", February 28, 2019
  2. MSCI, "MSCI China A Index", as of 06/10/2019
  3. MSCI, "MSCI China A Index", as of 06/10/2019
  4. South China Morning Post, "Hong Kong to Launch MSCI China A Index futures for global investors to hedge against risks in Asia's largest stock market" as of March 11, 2019
  5. Data from Morningstar as of 06/10/2019
  6. Data from MSCI as of 1/31/2019

About KraneShares
Krane Funds Advisors, LLC is the investment manager for KraneShares ETFs. Our suite of China-focused ETFs provides investors with solutions to capture China's importance as an essential element of a well-designed investment portfolio. We strive to provide innovative, first to market strategies that have been developed based on our strong partnerships and our deep knowledge of investing. We help investors stay current on global market trends and aim to provide meaningful diversification. Krane Funds Advisors, LLC is majority owned by China International Capital Corporation (CICC).

Carefully consider the Funds' investment objectives, risk factors, charges and expenses before investing. This and additional information can be found in the Funds' full and summary prospectus, which may be obtained by visiting www.kraneshares.com. Read the prospectus carefully before investing.

Investing involves risk, including possible loss of principal. There can be no assurance that a Fund will achieve its stated objectives. Indices are unmanaged and do not include the effect of fees. One cannot invest directly in an index. Diversification does not ensure a profit or guarantee against a loss.

The Fund is subject to industry concentration risk. The Fund may invest in derivatives, which are often more volatile than other investments and may magnify the Fund's gains or losses. Fluctuations in currency of foreign countries may have adverse effect to domestic currency values. Emerging markets involve heightened risk related to the same factors as well as increased volatility and lower trading volume. The Fund's investments are subject to liquidity risk, which exists when an investment is or becomes difficult to purchase or sell at a reasonable time and price. (r_ks_sei)

SOURCE Krane Funds Advisors, LLC