Krane Funds Advisors’ (KraneShares) KraneShares CSI China Internet UCITS ETF (LSE: KWEB) has passed USD175 million in assets under management (AUM) since launching in November 2018. The increase in AUM comes as KraneShares launched a securities lending program to benefit KWEB’s investors.
KWEB seeks to capture the compelling growth potential of China’s leading, innovation-driven internet companies. The fund tracks the CSI Overseas China Internet Index, the same benchmark and strategy as KraneShares’ flagship New York Stock Exchange-listed China internet ETF, which has a seven-year track record and USD2.8 billion in assets under management.
“Surpassing USD175 million in AUM is a major achievement for the KraneShares CSI China Internet UCITS ETF,” says Jonathan Krane, CEO of KraneShares. “This milestone coincides with the launch of securities lending on KWEB’s holdings, which we believe makes KWEB more attractive to European and UK investors.”
For UCITS ETF investors, funds with securities lending programs offer the added benefit of an additional income stream. When the securities-lending income stream is juxtaposed against the management fee, the overall cost of ownership of a UCITS ETF can be thought of as being significantly reduced given the general offsetting economic impact of income versus fees.
KraneShares’ three additional UCITS funds, listed below, have also entered into a Securities Lending Agency Agreement with Brown Brothers Harriman & Co (BBH) as Lending Agent:
KraneShares’ KraneShares MSCI China ESG Leaders UCITS ETF (LSE: KESG)
KraneShares MSCI China A-Share UCITS ETF (LSE: KBA)
KraneShares Bloomberg Barclays China Bond Inclusion UCITS ETF (LSE: KBND)
Up to 50 per cent of KWEB’s assets can be lent out. Currently, 90 per cent of net securities lending income earned is distributed directly to investors via the share price – a percentage that can only increase as KraneShares assets grow. Regardless of a security being on loan, the UCITS ETF’s value includes that of the underlying security. All of the UCITS ETF’s corporate action elections and income are protected for shares on loan. The income earned from securities lending is estimated and accrued daily into the ETF’s NAV and is distributed on a monthly basis.
“KWEB’s impressive AUM growth speaks to European and UK-based investors’ appetite for innovative China investment strategies,” says Dr Xiaolin Chen, Head of KraneShares International. “We are always looking for ways to enhance the client experience. We believe the income provided from securities lending will benefit investors and make our funds even more attractive.”
