KraneShares E Fund China Commercial Paper ETF (NYSE: KCNY) lists today in New York as the first Commercial Paper ETF in the United States
NEW YORK, Dec. 3, 2014 /PRNewswire/ -- KraneShares, a New York based ETF company (www.kraneshares.com), and E Fund Management, one of China's largest asset managers (http://www.efunds.com.hk/), launched the KraneShares E Fund China Commercial Paper ETF (NYSE: KCNY) today. KCNY seeks to deliver yields from investment-grade1 commercial paper issued in Mainland China by companies headquartered in China. We believe the Fund can be an alternative to U.S. investors' money market fund and/or bank deposit program investments. It is the first commercial paper ETF in the United States2.
"China has a very flat yield curve with relatively high interest rates versus the U.S., specifically in maturities under one year. For example, over the past twelve months China commercial paper returned 5.85%+ in USD compared to U.S. commercial paper at less than 0.20%, that's a 5.65% difference,3" said Jonathan Krane, CEO of KraneShares. "We partnered with E Fund Management, the largest fixed income manager in China and the second largest RQFII manager globally, to capture this spread and make it easy for investors to access via an exchange traded fund listed on NYSE."
Gaohui Huang, CEO of E Fund Management Hong Kong, added, "We believe that KCNY will be an excellent solution to the low yields currently being offered in U.S. money market funds and bank deposit programs; an industry with $3 Trillion+ assets under management. China commercial paper provides an opportunity for global investors to diversify their cash positions, maintain an average maturity close to U.S. money market funds and generate monthly income that has historically been much higher than U.S. commercial paper.4"
"China money market funds deliver investment-grade credit quality, very short average maturity of 100 days and yields north of 4.50%5. Our goal is to deliver a similar product to U.S. investors in an ETF wrapper which provides intra-day liquidity and no minimums. We believe we've done that with KCNY," said David Zhang, E Fund Management HK chief investment officer and co-portfolio manager of the Fund. "Chinese onshore commercial paper market has historically been very active and liquid, with more than $270 Billion USD outstanding and an average $3 Billion USD daily trading volume.6" Zhang added.
About KraneShares:
KraneShares, a product of Krane Funds Advisors, is focused on serving global investors with ETFs for the next-wave of China's development. Founded in 2011, our New York based firm offers proprietary ETFs constructed to give U.S. and global investors broad, diverse and quality exposure to China's historic growth story.
About E Fund Management:
E Fund Management is the third largest asset manager in China by assets under management with more than $50.0b in AUM. The firm is headquartered in Guangzhou, China and has 500 employees. E Fund has over 40 investment strategies available to global investors primarily focused on China's capital markets as of 10/31/2014. E Fund Management (HK) Co., Limited ("E Fund HK") was incorporated in Hong Kong on 11 August 2008. E Fund HK manages more than $4 billion RQFII assets and serves as the global investment and business platform for the parent company, E Fund Management Co., Limited ("E Fund"), offering overseas investment products as well as to provide better client service
1.) For purposes of the Underlying Index, investment grade commercial paper is commercial paper that is issued by an issuer whose long-term bonds are rated AAA or equivalent by one or more Chinese credit rating agencies; or commercial paper that is issued by an issuer whose long-term bonds are rated AA+ or equivalent by one or more Chinese credit rating agencies and commercial paper is rated A-1 or equivalent by one or more Chinese credit rating agencies
2.) Source Morningstar as of 11/21/2014
3.) Source Bloomberg as of 10/31/2014: Based on a comparison of the ChinaBond Commercial Paper Index Total ReturnI and the S&P U.S. Commercial Paper Index Total ReturnII over the past 12 months.
4.) Source Bloomberg as of 10/31/2014: Based on comparison of the ChinaBond Commercial Paper Index Total ReturnI and the S&P U.S. Commercial Paper Index Total ReturnII. Since 10/31/2008 the inception of the ChinaBond Index.
5.) Source Morningstar as of 11/21/2014
6.) Source China Central Depository & Clearing Co. as of 11/21/2014
Index Definitions:
I. ChinaBond Commercial Paper Index Total Return: Represents commercial paper and super & short-term commercial paper trading in RMB on the interbank bond market.
II. S&P U.S. Commercial Paper Index Total Return: consists of commercial paper with one to three month maturities from both the financial and non-financial sectors.
Carefully consider the Funds' investment objectives, risk factors, charges and expenses before investing. This and additional information can be found in the Funds' prospectus, which may be obtained here: http://kraneshares.com/resources/kraneshares_kcny_prospectus_2014.pdf
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. The Funds focus their investments primarily with Chinese issuers and issuers with economic ties to China. The Funds are subject to political, social or economic instability within China which may cause decline in value. Fluctuations in currency of foreign countries may have an adverse effect to domestic currency values. Emerging markets involve heightened risk related to the same factors as well as increase volatility and lower trading volume. Current and future holdings are subject to risk.
Narrowly focused investments and investments in smaller companies typically exhibit higher volatility. Internet companies are subject to rapid changes in technology, worldwide competition, rapid obsolescence of products and services, loss of patent protections, evolving industry standards and frequent new product productions. Such changes may have an adverse impact on performance.
The KraneShares E Fund China Commercial Paper ETF is subject to interest rate risk, which is the chance that bonds will decline in value as interest rates rise. It is also subject to income risk, call risk, credit risk, and Chinese credit rating risks. The components of the securities held by the Fund will be rated by Chinese credit rating agencies, which may use different criteria and methodology than U.S. entities or international credit rating agencies. The Fund may invest in high yield and unrated securities, whose prices are generally more sensitive to adverse economic changes. As such, their prices may be more volatile. The Fund is subject to industry concentration risk and is nondiversified. The KraneShares E Fund China Commercial paper ETF invests in sovereign and quasi-sovereign debt. Investments in sovereign and quasi-sovereign debt securities involve special risks, including the availability of sufficient foreign exchange on the date a payment is due, the relative size of the debt service burden to the economy as a whole, and the government debtor's policy towards the International Monetary Fund and the political constraints to which a government debtor may be subject. In order to qualify for the favorable tax treatment generally available to regulated investment companies, the Fund must satisfy certain income and asset diversification requirements each year. If the Fund were to fail to qualify as a regulated investment company, it would be taxed in the same manner as an ordinary corporation, and distributions to its shareholders would not be deductible by the Fund in computing its taxable income. Internet companies are subject to rapid changes in technology, worldwide competition, rapid obsolescence of products and services, loss of patent protections, evolving industry standards and frequent new product productions. Such changes may have an adverse impact on performance.
The ability of the KraneShares Bosera MSCI China A ETF to achieve its investment objective is dependent on the continuous availability of A Shares and the ability to obtain, if necessary, additional A Shares quota. If the Fund is unable to obtain sufficient exposure due to the limited availability of A Share quota, the Fund could seek exposure to the component securities of the Underlying Index by investing in depositary receipts. The Fund may, in some cases, also invest in Hong Kong listed versions of the component securities and B Shares issued by the same companies that issue A Shares in the Underlying Index. The Fund may also use derivatives or invest in ETFs that provide comparable exposures. Investments in derivatives, including swap contracts and index futures in particular, may pose risks in addition to those associated with investing directly in securities or other investments, including illiquidity of the derivatives, imperfect correlations with underlying investments, lack of availability and counterparty risk. The use of swap agreements entails certain risks, which may be different from, and possibly greater than, the risks associated with investing directly in the underlying asset. The Fund, may be concentrated in the financial services sector. Those companies may be adversely impacted by many factors, including, government regulations, economic conditions, credit rating downgrades, changes in interest rates, and decreased liquidity in credit markets. This sector has experienced significant losses in the recent past, and the impact of more stringent capital requirements and of recent or future regulation on any individual financial company or on the sector as a whole cannot be predicted.
The KraneShares ETFs are distributed by SEI Investments Distribution Company, 1 Freedom Valley Drive, Oaks, PA 19456, which is not affiliated with Krane Funds Advisors, LLC, the Investment Adviser for the Fund.
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SOURCE KraneShares
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