More In The Pipeline
Ahern previously spent 12 years working with ETFs at iShares, where his experience ranged from business development to portfolio management, and he worked with a broad range of clients including RIAs, hedge funds and family offices.
He says Krane was formed to provide investment opportunities and investor education about China. “We think there’s a huge educational void about China that needs to be filled,” he explains. “We want to bring in the voice of our mainland partners so U.S. investors can invest in confidence in the world’s second-largest economy.”
Ahern acknowledges that investor concerns about China––such as corruption, pollution and other problems––are legitimate. But he says the new Chinese leadership, which formally took office in March and is set to govern for the next 10 years, is pushing for societal, business and financial reforms not seen before in the country.
In addition to its two new ETFs, Ahern says Krane has seven other China funds in registration with the Securities and Exchange Commission, including on the fixed-income side.
“We want to provide access to the Dim Sum market,” says Ahern, referring to bonds denominated in the local Chinese currency and issued in Hong Kong.
Ahern says Krane is focusing its distribution efforts on the institutional and hi-end advisory worlds. Cutting through the clutter of an already crowded field of China ETFs won’t be easy. But Ahern says the largest China-focused funds have a heavy tilt toward financials, which is a big reason why they’ve suffered recently.
He posits that the KraneShares CSI China Five Year Plan ETF’s broad exposure to the government’s current economic priorities makes it a viable alternative. “We view it as a fund for strategic, buy-and-hold investors,” Ahern says.
He adds that the KraneShares CSI China Internet ETF is a more concentrated and volatile basket, but that it’s focused on a fast-growing sector that should get a boost with the possible initial public offering later this year of Alibaba Group Holding Ltd., China’s largest e-commerce company.
“The whole world will know about Chinese Internet companies when Alibaba goes public, and by us getting out there now and establishing a track record we’ll be well-positioned to take advantage of that,” Ahern says.