KraneShare’s Chinese ETFs reap the rewards of new SBL programme
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KraneShare’s Chinese ETFs reap the rewards of new SBL programme 08 October 2020New York Reporter: Drew Nicol
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KraneShares, a global asset management firm specialising in China-focused exchange-traded funds (ETFs), has attributed a recent boost in interest from European and UK investors to the introduction of a securities lending programme.
KraneShares hosts nine ETFs which track Chinese various indices and says it has earned greater interest in the three since launching a securities lending programme managed by Brown Brothers Harriman.
Jonathan Krane, CEO of KraneShares, suggests that the additional revenue from lending offsets management costs and makes the funds more attractive to European and UK investors.
One of the funds, KraneShares CSI China Internet UCITS ETF (KWEB), which tracks the performance of Chinese alternatives to firms such as Google, Facebook, Twitter, eBay, saw assets under management (AUM) swell to more than $175 million as of August.
The fund launched in November 2018 but KraneShares says the latest growth spurt has coincided with the introduction of the securities lending programme.
Up to half of the fund’s assets can be lent out and currently 90 percent of net income earned is distributed directly to investors via the share price.
The income earned from securities lending is estimated and accrued daily into the ETF’s net asset value calculation and is distributed on a monthly basis.
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.
“KWEB’s impressive AUM growth speaks to European and UK-based investors’ appetite for innovative China investment strategies,” says 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.”
KraneShares, which has offices in Europe, the US and Asia, was unable to immediately confirm if the programme will be expanded to its other China-focused, global or emerging market ETFs.
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