KraneShares MSCI All China Health Care Index ETF · AMEX:KURE
KraneShares MSCI All China Health Care Index ETF — KraneShares — Investor Presentation (March 2020)
23 slides from KraneShares MSCI All China Health Care Index ETF's investor presentation, Mar 31, 2020
Slide 1: Customizing China Exposure within Emerging Market Portfolios
KEMX 3/31/2020 Customizing China Exposure within Emerging Market Portfolios An Overview of the KraneShares MSCI Emerging Markets ex China ETF (Ticker: KEMX) info@kraneshares.com 1
Slide 2: Introduction to KraneShares
Introduction to KraneShares 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 provid
Slide 3: KraneShares MSCI Emerging Markets ex China ETF Investment Strategy
Investment Strategy: KEMX KEMX is benchmarked to the MSCI Emerging Markets ex China Index, which tracks large-cap and mid-cap companies within emerging market countries, excluding China. KEMX enables investors to build tailored Emerging Market (EM) KraneShares MSCI portfolios when combined with expo
Slide 4: Risk-return profile of active EM does not differ significantly from passive EM
The risk-return profile of active EM investment does not differ significantly from passive EM investment. • Investors often associate minimizing risk with active management, especially with regards to emerging markets. • Morningstar has developed the US Active Fund Diversified EM Category which aggr
Slide 5: China's equity market is large enough to be its own asset class
The size of China’s equity market is large enough to be considered its own asset class. China has the world’s second largest economy and stock market. 2019 Full MARKET Adjusted MARKET CAPITALIZATION* CAPITALIZATION ($bb) Top 5 Country Weights in the MSCI All Equity Asset Class (Percentage of World)
Slide 6: Inclusion efforts have made China's equity market available to outside investors
Inclusion efforts spanning the past 19 years have made China’s equity market available to outside investors. Share Type Weight in Description • In 2002, the Chinese government launched the Qualified Foreign Overall China Equity Market Institutional Investor (QFII) Quota Program, which allowed instit
Slide 7: China's equity performance demonstrates distinct portfolio impact and diversification
The unique characteristics of China’s equity market performance demonstrate its capacity to have a distinct portfolio impact and provide diversification benefits. • Over the past 19 years, China was the best performer in 5 years and the worst performer in 5. • By contrast, the U.S. was the best perf
Slide 8: China's historical returns exhibit low correlations to other regions
China’s historical pattern of returns exhibits low correlations to other regions. • Average correlations between China’s equity market and other major equity markets, including other emerging markets, have remained low over the past 19 years, maintaining correlation coefficients generally lower than
Slide 9: MSCI's definition of China represents a small portion of China's total market
MSCI’s current definition of China only represents a small portion of China’s total market. • While 55% of China’s equity market is China A-Shares, the current definition of China within MSCI EM Index is 12% China A-Shares and 88% Hong Kong and U.S. listed companies. • The KraneShares MSCI China All
Slide 10: KEMX can be paired with various China-focused strategies
KEMX can be paired with various China-focused strategies, allowing investors to choose the China allocation that matches their specific risk/return profile China Core China Core-Thematic China Thematic A core China allocation should A strong view on a particular Thematic investments may encompass th
Slide 11: Example Portfolio 1: China Core
China Core Example Portfolio 1: China Core • China represents about 40% of the market cap of EM; therefore, we believe an allocation of 40% All China1 within EM portfolios best reflects the full China opportunity. • A hypothetical portfolio of 60% EM ex China2 and 40% All China1 has provided portfol
Slide 12: Example Portfolio 2: China Core-Thematic
China Core-Thematic Example Portfolio 2: China Core-Thematic • Investors seeking broad China exposure complemented by growth sectors such as China Internet1 could create a blended core-thematic portfolio. • A blend of 20% China A-Shares2, 20% China Internet1 and 60% EM ex China has largely outperfor
Slide 13: Example Portfolio 3: China Thematic
China Thematic Example Portfolio 3: China Thematic • China’s sectors such as internet technology and healthcare are more volatile than Emerging Markets broadly, but have provided superior annualized returns Index since the inception of the CSI Overseas China Internet Index. • Investors looking to ga
Slide 14: China Thematic: tailoring EM portfolios around themes such as fewer SOEs
China Thematic Investors can tailor EM portfolios around specific investment themes such as decreased exposure to State-Owned Enterprises (SOEs). • State-Owned Enterprises are defined by MSCI as companies whose largest shareholder is a government entity or whose government ownership is over 20%1. •
Slide 15: Example Portfolio 4: China Tactical Overlay
Tactical Overlay Example Portfolio 4: China Tactical • Investors looking to dynamically adjust their China position could create a blended All China / EM ex China portfolio that responds to relative value and growth factors between China and EM ex China. • For example, one hypothetical approach coul
Slide 16: KraneShares MSCI Emerging Markets ex China ETF Key Fund Information
Key Fund Information Top Ten Holdings Ticker KEMX as of 3/31/2020. Excluding cash. % of Fund The Fund’s Holdings Are Subject to Change. KraneShares MSCI Emerging Markets Index Name MSCI Emerging Markets ex China TAIWAN SEMICONDUCTOR MANUFAC 9.97 Index ex China ETF (NYSE: KEMX) Index Ticker M1CXBRV S
Slide 17: Related KraneShares ETF Performance as of 3/31/2020
Related KraneShares ETF Performance as of 3/31/2020 Total Annual Cumulative % Average Annualized % Fund Name Inception Date Fund Operating Characteristics Expense 3 Mo 6 Mo Since Inception 1 Yr 3 Yr 5 Yr Since Inception Fund NAV -7.13% 9.19% 92.77% -3.85% 3.66% 6.87% 10.35% KraneShares CSI China 7/3
Slide 18: MSCI Emerging Markets ex China Index Characteristics
MSCI Emerging Markets ex China Index Characteristics Country Breakdown Sector Breakdown EM ex China MSCI Emerging Markets ex China ETF (KEMX) vs MSCI China All 25% Shares ETF (KALL) 30% 25% 20% 20% 15% 15% 10% 10% 5% 0% 5% 0% KEMX KALL Data from MSCI as of 3/31/2020. Others include Qatar, Philippine
Slide 19: Conclusion
Conclusion • Within emerging markets, KraneShares believes China is in a league of its own; an asset class unto itself distinguished by its market size and unparalleled growth. Custom China Allocation Strategies • We believe that incorporating a strategic China investment strategy that distinguishes
Slide 20: Index Definitions
Index Definitions: MSCI ACWI Index: captures large and mid cap representation across 23 Developed Markets (DM) and 23 Emerging Markets (EM) countries. The MSCI ACWI GDP Weighted Index: This index is based on the flagship MSCI ACWI Index, its parent index, and includes large and mid cap stocks across
Slide 21: Return, Risk & Correlation Index Definitions
RETURN, RISK & INDEX INDEX DEFINITION CORRELATION MSCI WORLD INDEX MSCI World Index (Net USD): The MSCI World Index captures large and mid cap representation across 23 Developed Markets Developed Markets (DM) countries. With 1,644 constituents, the index covers approximately 85% of the free float-ad
Slide 22: Index Definitions
INDEX INDEX DEFINITION CSI OVERSEAS CHINA INTERNET INDEX CSI Overseas China Internet Index (Net USD): selects overseas listed Chinese Internet companies as the index constituents; the China Internet index is weighted by free float market cap. The index can measure the overall performance of overseas
Slide 23: Important Notes
China’s Equity (Stock) Market: For the purposes of this presentation, this refers to the superset of investments including the Mainland, Hong Kong, and overseas listed securities found in the MSCI China All Shares Index. Note that others may use a different definition and, as such, the data provided