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