KraneShares MSCI All China Health Care Index ETF · AMEX:KURE
KraneShares MSCI All China Health Care Index ETF — KraneShares — Investor Presentation (April 2020)
29 slides from KraneShares MSCI All China Health Care Index ETF's investor presentation, Apr 22, 2020
Slide 1: The Emerging Market Consumer Internet & E-Commerce Opportunity
KEMQ 3/31/2020 The Emerging Market Consumer Internet & E-Commerce Opportunity An Overview of the KraneShares Emerging Markets Consumer Technology ETF (Ticker: KEMQ) 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: KEMQ Investment Strategy
Investment Strategy: KEMQ KEMQ seeks to track the Solactive Emerging Markets Consumer Technology Index. The Index selects companies from 26 eligible countries within emerging markets whose primary business or businesses are internet retail, internet software/services, purchase, KraneShares payment p
Slide 4: Transformational growth in emerging markets is driven by the Three P's
Transformational growth in emerging markets is driven by the “Three P’s” Population Penetration Performance The middle class consumer in Internet adoption is the catalyst Technology firms across the Emerging Markets will drive for rapid innovation, and emerging markets are taking global demand. faci
Slide 5: Emerging markets represent a huge consumer market opportunity
World Bank 2018 GDP, by PPP Ranking Economy (millions of international dollars) CHN 1 China 25,361,744 USA 2 United States 20,494,100 Emerging markets represent a huge consumer IND 3 India 10,498,468 market opportunity. JPN 4 Japan 5,484,951 DEU 5 Germany 4,505,236 • In order to fairly compare the c
Slide 6: Middle class consumption could reach 50% of global consumption by 2030
According to a study from the Brookings Institution, middle class consumption could reach 50% of total global consumption by the year 2030, more than doubling from 2015. Middle Class Consumption – Top 10 Countries (billions of 2011 PPP$ and global share) 2015 2020 2030 1 United States 4.7 13% China
Slide 7: Internet penetration across emerging markets
The rise of consumer technology goes beyond China to broader emerging markets as more of the developing world gets internet access for the first time. Internet penetration rates vary across emerging markets creating distinct Within major emerging market countries, internet usage has grown by an grow
Slide 8: Smart phones provide the first point of internet access
For the majority of the developing world, smart phones provide the first point of internet access, bypassing traditional computers. The proliferation of low cost smart phones across emerging Mobile-cellular telephone subscriptions markets, like the Mi Max 2 from Xiaomi pictured below, has meant much
Slide 9: China's adoption of new technologies has produced a leapfrogging effect
China’s rapid adoption of new technologies has produced a “leapfrogging” effect. Payment Commerce Cash Checking Credit Mobile Pay Local Market Big Box Retailer E-Commerce Transportation Healthcare Taxi Local Medical Care Hospitals E-Health Car Ownership App-Based Ride Sharing 9
Slide 10: Money and the internet have become virtually inseparable
Money and the internet have become virtually inseparable. Apps like Tencent’s WeChat and Alibaba’s Alipay allow users to do everything from buy a coffee, hail a cab, to make investments in wealth management products, all from a smart phone. WeChat users can invest in mutual funds through the same ap
Slide 11: Three core themes in Chinese markets
Through our experience investing in the Chinese markets we identified three core themes: • Internet adoption is expanding rapidly within China • Domestic consumption and retail sales are steadily increasing and frequently taking place online • The China E-Commerce sector has consistently outperforme
Slide 12: Proliferation of e-commerce firsthand in China
Through our trips to China we saw the proliferation of e-commerce firsthand. Over 50 billion packages were delivered in China in 2018, an increase of 26% from the previous year1. JD.com warehouse employees prepare same-day delivery JD.com owns its own logistics network and has a fleet of delivery ve
Slide 13: China is rapidly becoming a global internet services leader
China is Rapidly Becoming A Global Internet Services Leader 2013 2020 Potential Future IPOs Top 10 Global Internet Companies Top 10 Global Internet Companies Top 10 Private Companies3 By Market Cap1 By Market Cap2 Alphabet $374.4B Amazon $1.0 T Toutiao (Bytedance) $75.0B Amazon $182.5B Alphabet $830
Slide 14: The Alibaba Ecosystem
The Alibaba Ecosystem China Domestic Marketplaces Global Marketplaces 1688.com Tmall.com (B2B Ecommerce Marketplace) (B2C Online Retail Platform) AliExpress Taobao (Global B2B Marketplace) (Global C2C E-commerce Website) Cainiao Alimama (E-commerce Logistics Platform) (Online Advertising Platform) A
Slide 15: Alibaba has outperformed Amazon in revenue growth and profit margins
Historically, Alibaba has consistently outperformed Amazon in terms of revenue growth and profit margins. YoY Revenue Growth Profit Margins 90% 80% 80% 60% 70% 40% 60% 20% 50% 40% 0% 30% -20% 20% -40% 10% -60% 2005 2009 1997 1998 1999 2000 2001 2002 2003 2004 2006 2007 2008 2010 2011 2012 2013 2014
Slide 16: Naspers is a global internet and entertainment group
Naspers is a global internet and entertainment group that has grown into one of the largest technology investors in the world. The company’s investments span the globe and are organized into six business areas: Classifieds, Payments, B2C E-Commerce, Ventures, Video Entertainment, and Media¹. Naspers
Slide 17: Solactive Emerging Markets Consumer Technology Index filtering process
In order to deliver a precise representation of the emerging markets consumer technology opportunity, we worked with Solactive to develop the Solactive Emerging Markets Consumer Technology Index. Filtering Process for Index Constituent Selection 26 eligible countries: Argentina, Brazil, Chile, Colom
Slide 18: Capturing the EM consumer/technology sector and GICS reclassification
Capturing the performance of the EM consumer/technology sector can be complicated. • In the past, E-Commerce and internet platforms were classified by Global Industry Classification Standards (GICS) as information technology (IT) companies. • However, as this sector evolved, it ended up grouping soc
Slide 19: EM consumer/technology outperformed developed and emerging markets
EM consumer/technology outperformed developed and emerging markets. • In order to show the historical performance of the EM consumer/technology sectors within the MSCI EM Index, we combined the Index’s information technology, consumer discretionary, and communication services sectors. We used the se
Slide 20: KEMQ offers greater exposure to growth-oriented sectors than MSCI EM
KEMQ offers greater exposure to growth-oriented sectors than the MSCI Emerging Markets Index. 100% KEMQ Health Care 100% MSCI EM Information 3% Health Care Financials Real Estate Technology 1% 1% Consumer 3% Weight of Growth and Value-Oriented Sectors 9% Consumer Staples Staples 7% 1% 75% MSCI 50% M
Slide 21: KEMQ country breakdown versus MSCI Emerging Markets
Our index filtering process also results in a very different country breakdown than traditional emerging markets. KEMQ Country Breakdown Country Breakdown Argentina Russia KEMQ vs. MSCI Emerging Markets 3% 3% 45 Others 40 Poland 35 9% 3% 30 % Weight 25 South Africa 20 China 4% 15 41% 10 Malaysia 5 4
Slide 22: KEMQ holds fewer state-owned enterprises than MSCI EM
KEMQ holds significantly fewer state-owned enterprises (SOEs) than the broader MSCI Emerging Markets Index. KEMQ MSCI Emerging Markets SOE 2% SOE 26% Non-SOE 98% Non-SOE 74% Data from Factset and Callan as of 3/31/2020. See slide 27 for index definitions. State-Owned Enterprises as defined by MSCI a
Slide 23: Emerging market internet companies around the world
Emerging market internet companies around the world 23
Slide 24: KEMQ tracks companies throughout key emerging market countries
The KraneShares Emerging Markets Consumer Technology ETF (Ticker: KEMQ) tracks a variety of companies throughout key emerging market countries. Top countries and Top Holdings in country Weight Company Logo Company description weight within KEMQ New Oriental Education & Technology Group, Inc. offers
Slide 25: KraneShares Emerging Markets Consumer Technology ETF fund details
Fund Details As of 3/31/2020 Top Ten Holdings as of 3/31/2020 % of The Fund’s Holdings Are Subject to Change. Fund Primary Exchange NYSE TENCENT HOLDINGS LTD 3.95 KraneShares Emerging Markets Cusip 500767876 NETEASE INC-ADR 3.91 Consumer Technology ETF (NYSE: KEMQ) Total Annual Fund Operating 0.80%
Slide 26: Key Takeaways
Key Takeaways • Our China experience has allowed us to identify and deliver extraordinary opportunities across emerging markets • The three P’s will shape buying behavior for decades to come o Population: The middle class consumer o Penetration: Rapid internet adoption o Performance: The growth of t
Slide 27: Index Definitions
Index Definitions: CSI Overseas China Internet Index: Represents the Chinese internet companies listed in overseas markets (New York and Hong Kong), in order to measure the performance of the Chinese internet companies listed outside mainland China. MSCI China Index: The MSCI China Index captures la
Slide 28: Important Notes
Important Notes 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 befor
Slide 29: Data disclaimer and forward-looking statements
Although Krane Funds Advisors LLC and its affiliates (“Krane”) shall obtain data from sources that Krane considers reliable, all data contained herein is provided “as is” and Krane makes no representation or warranty of any kind, either express or implied, with respect to such data, the timeliness t