Krane Funds Advisors LLC on Friday rolled out the KraneShares MSCI One Belt One Road ETF (OBOR), which seeks to tap into China’s massive One Belt One Road infrastructure project, or OBOR initiative. The fund tracks the MSCI Global China Infrastructure Exposure Index.
OBOR the economic plan is China’s sweeping effort to invest up to $500 billion in 69 emerging markets over the next five years, focusing mostly on Asia, the Middle East and Africa. China hopes to create a modern, refashioned version of the fabled Silk Road with new trade links and huge infrastructure projects including railroads, ports and highways. In doing so, China expects this enormous endeavor to boost the country’s exports to participating nations.
According to a press release from KraneShares, the OBOR project would represent an aggregate population of 4.5 billion and a nominal GDP of $23 trillion USD, or 62 percent of the world’s population and 30 percent of global GDP. The press release cited a recent report by the Asian Development Bank estimating that Asia and the Pacific will need $1.7 trillion in annual infrastructure investment, totaling as much as $26 trillion by 2030
The main focus of OBOR the ETF is on the industrials and materials sectors, which comprised 40 percent and 24 percent of the underlying index, respectively, based on MSCI index data as of August 31. Utilities (16 percent), energy (11 percent) and financials (9 percent) made up the rest.
China is the largest country in the index at 44 percent, with Singapore second at 10 percent. Among other countries included in the index are Malaysia, Russia, Israel, Thailand, India and Poland.
The new ETF’s net expense ratio is 0.79 percent.