KraneShares E Fund China Commercial Paper ETF
Transcription
KraneShares E Fund China Commercial Paper ETF
KCNY Aaron Dillon, Managing Director 微信 agdillon +1-347-642-2640 [email protected] KraneShares E Fund China Commercial Paper ETF China commercial paper may be appropriate for customers who have a(n)… Investment Strategy The KraneShares E Fund China Commercial Paper ETF (NYSE: KCNY) seeks to track the CSI Diversified High Grade Commercial Paper Unhedged Index. The Fund seeks to deliver a diversified basket of investment-grade1 commercial paper denominated in on-shore renminbi issued by sovereign, quasi-sovereign and corporate issuers in the People’s Republic of China and traded in the inter-bank bond market. Commercial paper in the Fund is investment-grade and has a remaining term to final maturity of no more than one year and no less than one month. Effective Maturity Investment Grade 180 days Yield to Maturity 5.09% Coupon 4.86% Holdings 100% Cash & Equivalents • allocation to investment products that only invest in money market securities • investment goal with a short time horizon • low tolerance for volatility • daily liquidity requirement • desire to diversify their cash-equivalent holdings Monthly Distributions (as of 03/31/2015) KCNY Key Metrics (as of 03/31/2015) Credit quality of underlying securities1 Data as of 03/31/2015 % Ex Date NAV Total Mar 26, 2015 34.73 0.0000 0.00% Feb 24, 2015 34.48 0.0785 0.23% Jan 27, 2015 34.53 0.0646 0.19% Dec 26, 2014 34.59 0.0914 0.26% 1.) For purposes of the Underlying Index, investment grade commercial paper is commercial paper that is issued by an issuer whose long-term bonds are rated AAA or equivalent by one or more Chinese credit rating agencies; or commercial paper that is issued by an issuer whose long-term bonds are rated AA+ or equivalent by one or more Chinese credit rating agencies and commercial paper is rated A-1 or equivalent by one or more Chinese credit rating agencies China Commercial Paper Historical Total Returns As of 03/31/2015 ChinaBond Commercial Paper Index Total Return (USD) 3mo 6mo 1yr 1.41% 1.37% 5.70% 3yr 17.10% 5yr 36.49% Since Inception (ChinaBond Commercial Paper Index TR) 10/31/2008 40.89% Source: Bloomberg – 03/31/2015 Index returns are for illustrative purposes only and do not represent fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest in an index. Past performance does not guarantee future results. ChinaBond Commercial Paper Index Total Return: Represents commercial paper and super & short-term commercial paper trading in RMB on the interbank bond market. KCNY Performance History As of 03/31/2015* Expense Ratio = 0.56% 3mo 6mo 1yr Since Inception (12/02/2014) Fund Nav 0.85% – – 0.13% Closing Price -0.05% – – -0.50% Index 0.48% – – -0.40% *Cumulative return is the aggregate amount that an investment has gained or lost over time. Annualized Return is the average return gained or lost by an investment each year over a given time period. The performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when sold or redeemed, may be worth more or less than their original cost and current performance may be lower or higher than the performance quoted. ETF shares are not redeemable with the issuing fund other than in large Creation Unit aggregations. Instead, investors must buy or sell ETF Shares in the secondary market with the assistance of a stockbroker. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling. The NAV of the Fund’s shares is calculated each day the national securities exchanges are open for trading as of the close of regular trading on the New York Stock Exchange (“NYSE”), normally 4:00 p.m. Eastern time (the “NAV Calculation Time”). Shares are bought and sold at market price not NAV. Closing price returns are based on the midpoint of the bid/ask spread at 4:00 pm Eastern Time (when NAV is normally determined). An active secondary market for the Fund’s shares may not exist. Although the Fund’s shares will be listed on an exchange, subject to notice of issuance, it is possible that an active trading market may not develop or be maintained. There is no guarantee that distributions will be paid. Aaron Dillon, Managing Director 微信 agdillon +1-347-642-2640 [email protected] KCNY Data as of 03/31/2015 Potential benefits of investing in China commercial paper: 1 2 Yield: China commercial paper has outperformed US commercial paper and USD bank deposits over the past year. Historical Stability: China commercial paper has produced minimal downside deviation1 since 10/31/20082 Trailing 12 months total return as of 03/31/2015 6.00% Growth of $10,000 (10/31/2008 to 3/31/2015) 5.70% ■ ChinaBond Commercial Paper Index TR (USD) 4.00% 15,000 ■ S&P US Commercial Paper Index TR 14,000 ■ USD Deposit Rates (1M term, retail) 13,000 12,000 2.00% 11,000 0.20% 0.17% 10,000 0.00% 9,000 ChinaBond S&P US Commercial USD Deposit Rates Commercial Paper Paper Index TR (1M term, retail) Index TR (USD) 3 Minimal duration risk: China’s yield curve is flat meaning investors do not have to take on duration risk to obtain attractive yields ■ CNY China Sovereign (Interbank) Curve ■ US Treasury China and US Yield Curve as of 03/31/2015 4.23 4.5 4.0 3.5 3.27 3.17 3.22 3.27 3.31 3.46 3.61 3.65 3.0 2.5 2.0 1.5 2.54 Best risk/ reward potential opportunity 3m spread = 3.57% 1.71 1.37 0.88 0.56 1.0 0.5 1.92 0.02 0.14 0.23 3M 6M 1Y 0.0 2Y 3Y 5Y 7Y 10Y 30Y Source: Bloomberg – 03/31/2015 Source: Bloomberg as of 3/31/2015. Index performance is for illustrative purposes only and is not intended to serve as a proxy for the Fund's future performance. 1.) Downside Deviation: A measure of downside risk that focuses on returns that fall below zero threshold or minimum acceptable return (MAR). 2.) The ChinaBond Commercial Paper Index TR was incepted 10/31/2008 Index Definitions: ChinaBond Commercial Paper Index Total Return: Represents commercial paper and super & short-term commercial paper trading in RMB on the interbank bond market. S&P US Commercial Paper Index Total Return: consists of commercial paper with one to three month maturities from both the financial and non-financial sectors. USD Deposit Rates (1M term, retail): Interest rate received for deposits into a FDIC insured bank account with 1 month lock-up. ©KraneShares 2015 www.kraneshares.com Aaron Dillon, Managing Director 微信 agdillon +1-347-642-2640 [email protected] KCNY Data as of 03/31/2015 Key characteristics of the KraneShares E Fund China Commercial Paper ETF (NYSE:KCNY), US money market funds and US bank deposit programs KCNY Money Market Funds Bank Deposit Programs • KCNY only invests in China commercial paper – a money market security, and attempts to preserve principal investment while providing attractive monthly distributions • Money market funds only invest into money market securities and are considered to be a cash equivalent by many investors • Bank deposit programs are used by brokerage firms as a cash sweep option • The average maturity for the fund is less than five months (128 days) • Average maturity for money market funds is two months or less and they must invest in securities with the highest credit quality according to SEC rule 2a-7 • Only invests into commercial paper that has received an investment grade credit rating • Many brokerage firms offer money market funds as as a cash sweep option • These Programs are FDIC insured (limited to a certain deposit amount and conditions) and generally deliver yields similar to money market funds • Since bank deposit programs are "invested" in cash, weighted average maturity and credit quality are not applicable • KraneShares believes that KCNY may be an appropriate cash-alternative for all types of investors China Commercial Paper Historical Total Return vs. US Commercial Paper & USD Deposit Rates (as of 3/31/2015) 3M 6M YTD 1YR 3YR 5YR Since Inception (ChinaBond Commercial Paper Index TR) 10/31/2008 ChinaBond Commercial Paper Index TR (USD) 1.41% 1.37% 1.41% 5.70% 17.10% 36.49% 40.89% S&P US Commercial Paper Index TR 0.06% 0.10% 0.06% 0.20% 0.77% 1.44% 2.19% USD Deposit Rates (1M term, Retail) 0.05% 0.09% 0.05% 0.17% 0.53% 0.94% 1.36% +/- S&P US Commercial Paper Index Total Return 1.35% 1.26% 1.35% 5.50% 16.34% 35.04% 38.70% +/- USD Deposit Rates (1M term, Retail) 1.36% 1.28% 1.36% 5.53% 16.57% 35.54% 39.53% ChinaBond Commercial Paper Index TR (USD) Trailing 60 Month Total Return – 4/30/2010 – 3/31/2015 Year Jan Feb Mar Apr May Jun 2015 1.44% 0.18% -0.20% – – – 2014 0.65% -0.68% -0.82% -0.05% 0.69% 2013 0.84% 0.30% 0.51% 1.07% 2012 0.45% 0.66% 0.44% 2011 0.20% 0.69% 0.78% 2010 – – – Jul Oct Nov Dec Total Aug Sep – – – – – 1.16% 0.95% 0.94% 0.52% -0.89% -0.19% 1.05% 3.34% 0.86% -0.25% 0.69% 0.51% 0.37% 0.74% 0.18% 1.14% 7.19% 0.70% -0.68% 0.49% 0.15% 0.37% 1.29% 1.18% 0.45% 0.24% 5.87% 1.24% 0.51% 0.30% 0.45% 1.33% 0.38% 1.00% 0.20% 1.70% 9.13% 0.20% 0.13% 0.76% 0.46% -0.28% 1.93% 0.46% 0.13% 1.28% – 1.41% Source: Bloomberg – 03/31/2015 Index returns are for illustrative purposes only and do not represent fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest in an index. Past performance does not guarantee future results. The KraneShares E Fund China Commercial Paper ETF is not a money market fund ©KraneShares 2015 www.kraneshares.com Aaron Dillon, Managing Director 微信 agdillon +1-347-642-2640 [email protected] KCNY Data as of 03/31/2015 Brendan Ahern Chief Investment Officer Aaron Dillon Managing Director +1 (646) 218 9852 [email protected] +1 (347) 642 2640 [email protected] David Zhang E Fund Chief Investment Officer Guangdong (Jeffrey) Qi E Fund Portfolio Manager [email protected] [email protected] About KraneShares: KraneShares, a product of Krane Funds Advisors, is focused on serving global investors with ETFs for the next-wave of China’s development. Founded in 2011, our New York based firm offers proprietary ETFs constructed to give US and global investors broad, diverse and quality exposure to China’s historic growth story. About E Fund: E Fund Management is the third largest asset manager in China by assets under management with more than $50.0b in AUM. The firm is headquartered in Guangzhou, China and has 500 employees. E Fund has over 40 investment strategies available to global investors primarily focused on China’s capital markets as of 10/31/2014. E Fund Management (HK) Co., Limited (“E Fund HK”) was incorporated in Hong Kong on August 11, 2008. As of 12/31/2014 E Fund HK manages more than $4 billion Renminbi qualified foreign institutional investor (RQFII) assets and serves as the global investment and business platform for the parent company, E Fund Management Co., Limited (“E Fund”), offering overseas investment products as well as to provide better client service. Carefully consider the Funds' investment objectives, risk factors, charges and expenses before investing. This and additional information can be found in the Funds' 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 focus their investments primarily with Chinese issuers and issuers with economic ties to China. 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. Current and future holdings are subject to risk. The KraneShares E Fund China Commercial Paper ETF is subject to interest rate risk, which is the chance that bonds will decline in value as interest rates rise. It is also subject to income risk, call risk, credit risk, and Chinese credit rating risks. The components of the securities held by the Fund will be rated by Chinese credit rating agencies, which may use different criteria and methodology than U.S. entities or international credit rating agencies. The Fund may invest in high yield and unrated securities, whose prices are generally more sensitive to adverse economic changes. As such, their prices may be more volatile. The Fund is subject to industry concentration risk and is nondiversified. The KraneShares E Fund China Commercial paper ETF invests in sovereign and quasi-sovereign debt. Investments in sovereign and quasi-sovereign debt securities involve special risks, including the availability of sufficient foreign exchange on the date a payment is due, the relative size of the debt service burden to the economy as a whole, and the government debtor’s policy towards the International Monetary Fund and the political constraints to which a government debtor may be subject. In order to qualify for the favorable tax treatment generally available to regulated investment companies, the Fund must satisfy certain income and asset diversification requirements each year. If the Fund were to fail to qualify as a regulated investment company, it would be taxed in the same manner as an ordinary corporation, and distributions to its shareholders would not be deductible by the Fund in computing its taxable income. Narrowly focused investments typically exhibit higher volatility. Internet companies are subject to rapid changes in technology, worldwide competition, rapid obsolescence of products and services, loss of patent protections, evolving industry standards and frequent new product productions. Such changes may have an adverse impact on performance. The KraneShares ETFs are distributed by SEI Investments Distribution Company, which is not affiliated with Krane Funds Advisors, LLC, the Investment Adviser for the Fund. ©KraneShares 2015 www.kraneshares.com