NEW YORK, June 4, 2021 /PRNewswire/ — Krane Funds Advisors, LLC, (“KraneShares”), a global asset management firm known for its China-focused exchange-traded funds (ETFs) and innovative China investment strategies, today announced the launch of the KraneShares Bloomberg Barclays China Bond Inclusion ETF (Ticker: KBND).
KBND offers investors access to RMB-denominated securities included in the Bloomberg Barclays Global Aggregate Index, an index with trillions of dollars in assets estimated to be passively tracking or actively managed against it.1 In December 2020, Bloomberg Barclays completed the process of including Chinese RMB-denominated securities within the benchmark2.
Analysts estimated the inclusion drove over $150 billion of new money into China’s onshore bond market3 and greatly expanded the universe of international investors participating in the market. KBND is the first US-listed ETF to track the Bloomberg Barclays China Inclusion Focused Bond Index, which covers issuers in China included within the Bloomberg Barclays Global Aggregate Index with ratings from international rating agencies.4
China’s $17 trillion bond market is the second largest in the world.5 Yields on China’s government bonds are significantly higher than government bond yields in many developed markets. China has an A+ sovereign credit4 rating and 10-year government bond yield comfortably above 3%.4 China’s government, government-related, and investment-grade bond market can provide attractive yields at a sovereign risk level on par with Japan.6 Additionally, China’s government bonds were a source of stability during the global pandemic, and China’s currency was among the least volatile in emerging Asia in 2020.4
“With attractive yields, low correlations, low sovereign risk, and ratings from international agencies, we believe China’s bond market presents a compelling opportunity,” said Jonathan Krane, CEO of KraneShares. “We are proud to partner with Bloomberg on KBND to bring new access to China’s fixed income market to our clients.”
“The inclusion of RMB-denominated bonds in Bloomberg’s fixed income indexes is a significant development for China’s integration with global financial markets,” Steve Berkley, CEO of Bloomberg Index Services Limited (BISL), explained. “We are excited to partner with KraneShares to make the Bloomberg Barclays China Inclusion Focused Bond Index investable through KBND.”
The launch was achieved through converting and renaming the existing KraneShares E Fund China Commercial Paper ETF (Ticker: KCNY). Effective June 4, 2021, the Fund tracks the Bloomberg Barclays China Inclusion Focused Bond Index.
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 deliver innovative, first-to-market strategies developed based on our strong partnerships and deep knowledge of investing. We help investors stay up to date on global market trends and aim to provide meaningful diversification. Krane Funds Advisors, LLC, is a signatory of the United Nations-supported Principles for Responsible Investing (UN PRI). The firm is majority owned by China International Capital Corporation (CICC).
- Chen, Sally. “China Deepens Global Finance Links as it Joins Benchmark Indexes,” IMF. June 19, 2019.
- “Bloomberg Confirms China Inclusion in the Bloomberg Barclays Global Aggregate Indices,” Bloomberg Professional Services. January 30, 2019.
- Financial Times. “Bloomberg adds Chinese government bonds to flagship index,” 3/31/2021.
- Data from Bloomberg as of 4/30/2021
- Data from the Bank for International Settlements as of 9/30/2020.
- S&P Rating. According to S&P Global Ratings as of 4/30/2021.
Diversification does not ensure a profit or guarantee against a loss.
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. The Funds are subject to political, social or economic instability within China which may cause a decline in value. Fluctuations in currency of foreign countries may have an adverse effect on domestic currency values. Emerging markets involve heightened risk related to the same factors as well as increased volatility and lower trading volume.
The KraneShares Bloomberg Barclays China Bond Inclusion ETF is subject to interest rate risk, which is the chance that bonds will decline in value as interest rates rise. The Fund is subject to sovereign and quasi-sovereign debt risk. The governmental authority that controls the repayment of sovereign and quasi-sovereign debt may be unwilling or unable to repay the principal and/or interest when due. The Fund may invest in perpetual bonds, which offer fixed return with no maturity date. Perpetual bonds can be more volatile than other types of bonds that have a maturity date and may be more sensitive to changes to interest rates. The Fund depends on the China Interbank Bond Market Program to invest directly in RMB Bonds. There is no guarantee the Fund will be able to continue to participate in the program. The Fund may invest in high yield and unrated securities, whose prices are generally more sensitive to adverse economic changes and consequently more volatile. The Fund is subject to industry concentration risk and is non-diversified. Narrowly focused investments typically exhibit higher volatility.
The KraneShares ETFs are distributed by SEI Investments Distribution Company (SIDCO), which is not affiliated with Krane Funds Advisors, LLC, the Investment Adviser for the Fund, any sub-advisers for the Funds or Bloomberg Index Services Limited.
SOURCE Krane Funds Advisors, LLC