NEW YORK, Feb. 08, 2024 (GLOBE NEWSWIRE) -- Krane Funds Advisors, LLC (“KraneShares”), an asset management firm known for its global exchange-traded funds (ETFs) and innovative investment strategies, today announced the launch of two China internet defined outcome ETFs on the New York Stock Exchange (NYSE).
The ETF pair provides exposure to China’s internet sector with varying degrees of added downside protection. The KraneShares 100% KWEB Defined Outcome January 2026 ETF (Ticker: KPRO) aims to match the performance of the KraneShares CSI China Internet ETF (Ticker: KWEB) to a predetermined cap of 22.69%, with 100% downside protection. Meanwhile, the KraneShares 90% KWEB Defined Outcome January 2026 ETF (Ticker: KBUF) aims to match the performance of KWEB to a predetermined cap of 41.20%, with 90% downside protection.
“We are seeing a record valuation disparity between the US and China and think now is the time to invest. However, as 2024 progresses, volatility persists,” said Jonathan Shelon, KraneShares COO. “These ETFs are excellent options for investors looking for China exposure and seeking downside protection.”
“The defined outcome strategies are made possible by KWEB’s deep, liquid options market,” said James Maund, KraneShares Head of Capital Markets, “With approximately $5.5 billion in notional open interest, KWEB now has the 10th largest options market amongst all 3,405 US-listed ETFs.1 This level of options liquidity makes it efficient for us to create products like KPRO and KBUF for our clients.”
“China’s E-Commerce market size in 2022 was $2 trillion,2 twice that of the US,3” said Jonathan Krane, KraneShares CEO. “We are dedicated to providing investors a variety of ways to access this incredible growth story. Our flagship ETF, KWEB, has become the benchmark for China’s internet sector globally, and last year, we launched the KraneShares China Internet & Covered Call Strategy ETF (Ticker: KLIP), which is popular with income-seeking investors. We believe KPRO and KBUF will prove just as attractive to investors seeking to access the China internet growth opportunity but with downside protection.”
Defined outcome ETFs provide investors with convenient access to strategies otherwise only available through the purchase of options or structured notes. KraneShares will manage the options exposure on behalf of its clients through KPRO and KBUF.
For more information on the KraneShares China Internet Defined Outcome ETF Suite please visit kraneshares.com/kbuf for information on KBUF or kraneshares.com/kpro for information on KPRO, or consult your financial advisor.
The Funds have characteristics unlike many other traditional investment products and may not be suitable for all investors. For more information regarding whether an investment in the Funds is right for you, please read the Fund’s prospectus including “Investor Suitability Considerations.”
About KraneShares
KraneShares is a specialist investment manager focused on China, Climate, and Uncorrelated Assets. KraneShares seeks to provide innovative, high-conviction, and first-to-market strategies based on the firm and its partners' deep investing knowledge. KraneShares identifies and delivers groundbreaking capital market opportunities and believes investors should have cost-effective and transparent tools for attaining exposure to various asset classes. The firm was founded in 2013 and serves institutions and financial professionals globally. The firm is a signatory of the United Nations-supported Principles for Responsible Investing (UN PRI).
- Data from Bloomberg as of 2/5/2023. Based on open interest in terms of number of options contracts.
- The State Council, the People’s Republic of China. Note: Figures converted from Chinese Renminbi to USD as of 3/31/2022. Retrieved on 12/31/2023.
- Data from U.S. Department of Commerce as of 12/31/2022. Retrieved on 12/31/2023.
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/kpro and kraneshares.com/kbuf. Read the prospectus carefully before investing.
Risk Disclosures:
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.
This information should not be relied upon as research, investment advice, or a recommendation regarding any products, strategies, or any security in particular. This material is strictly for illustrative, educational, or informational purposes and is subject to change. Certain content represents an assessment of the market environment at a specific time and is not intended to be a forecast of future events or a guarantee of future results; material is as of the dates noted and is subject to change without notice.
The Funds have characteristics unlike many other traditional investment products and may not be suitable for all investors. An investment in the Funds may not be appropriate for investors who do not intend to hold Fund shares for the entire Outcome Period. In the event an investor purchases shares after the beginning of the Outcome Period or sells shares prior to end of the Outcome Period, the returns realized by the investor may not match those that the Funds seeks to provide. The Funds may not fully protect against KWEB losses if their share price drops during the Outcome Period. Buying or selling shares during this time may affect the Buffer’s availability. Even if KWEB’s value rises, the Buffer won’t guard against any subsequent decrease. A new Cap is set at the start of each Outcome Period and depends on current market conditions. Therefore, the Cap may change between Outcome Periods and is unlikely to stay constant. Investors should keep track of Cap changes for each Outcome Period, details of which will be provided according to the process outlined in the Funds' prospectus. The Funds aim to provide returns subject to a Cap, but there is no guarantee of success. If the Funds' gains exceed the Cap, the Funds won’t appreciate beyond the Cap and will underperform. Due to the Cap, the Funds may significantly underperform KWEB. Buying shares after the Outcome Period starts may limit gains, exposing to potential losses. Selling shares before the Outcome Period ends may result in underperformance.
The Fund may invest in derivatives, which are often more volatile than other investments and may magnify the Fund’s gains or losses. A derivative (i.e., futures/forward contracts, swaps, and options) is a contract that derives its value from the performance of an underlying asset. The primary risk of derivatives is that changes in the asset’s market value and the derivative may not be proportionate, and some derivatives can have the potential for unlimited losses. Derivatives are also subject to liquidity and counterparty risk. The Fund is subject to liquidity risk, meaning that certain investments may become difficult to purchase or sell at a reasonable time and price. If a transaction for these securities is large, it may not be possible to initiate, which may cause the Fund to suffer losses. Counterparty risk is the risk of loss in the event that the counterparty to an agreement fails to make required payments or otherwise comply with the terms of the derivative.
The Funds will use FLEX options from the Options Clearing Corporation (OCC). There’s a risk of the OCC failing to meet its obligations. The Fund may face challenges in less liquid FLEX options markets and have difficulty closing positions at desired times and prices. If the unlikely event the OCC becomes insolvent, the Fund could suffer losses. Failure by market participants to enter into FLEX options transactions that reflect market value could result in losses. Some FLEX options may expire worthless. The value of these options is associated with KWEB and influenced by factors such as market fluctuations and time until expiration.
The ability of the Funds to achieve their respective investment objectives is dependent, in part, on the continuous availability of A Shares and the ability to obtain, if necessary, additional A Shares quota. If the Funds are unable to obtain sufficient exposure to limited availability of A Share quota, the Funds could seek exposure to the component securities of the Underlying Index by investment in other types of securities. The Funds are subject to political, social or economic instability within China which may cause decline in value. Emerging markets involve heightened risk related to the same factors as well as increase volatility and lower trading volume. Fluctuations in currency of foreign countries may have an adverse effect to domestic currency values. The Funds are new and do not yet have a significant number of shares outstanding. If the Funds do not grow in size, they will be at greater risk than larger funds of wider bid-ask spreads for their shares, trading at a greater premium or discount to NAV, liquidation and/or a trading halt.
Narrowly focused investments typically exhibit higher volatility. The Funds' assets are expected to be concentrated in a sector, industry, market, or group of concentrations to the extent that the Underlying Index has such concentrations. The securities or futures in that concentration could react similarly to market developments. Thus, the Funds are subject to loss due to adverse occurrences that affect that concentration. In addition to the normal risks associated with investing, investments in smaller companies typically exhibit higher volatility. KPRO and KBUF are non-diversified.
ETF shares are bought and sold on an exchange at market price (not NAV) and are not individually redeemed from the Fund. However, shares may be redeemed at NAV directly by certain authorized broker-dealers (Authorized Participants) in very large creation/redemption units. The returns shown do not represent the returns you would receive if you traded shares at other times. Shares may trade at a premium or discount to their NAV in the secondary market. Brokerage commissions will reduce returns. Beginning 12/23/2020, market price returns are based on the official closing price of an ETF share or, if the official closing price isn't available, the midpoint between the national best bid and national best offer ("NBBO") as of the time the ETF calculates the current NAV per share. Prior to that date, market price returns were based on the midpoint between the Bid and Ask price. NAVs are calculated using prices as of 4:00 PM Eastern Time.
The KraneShares ETFs and KFA Funds ETFs are distributed by SEI Investments Distribution Company (SIDCO), 1 Freedom Valley Drive, Oaks, PA 19456, which is not affiliated with Krane Funds Advisors, LLC, the Investment Adviser for the Funds, or any sub-advisers for the Funds.
Contact:
Joseph Dube – KraneShares, Head of Marketing
Joseph.Dube@kraneshares.com
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