KraneShares. Krane Funds Advisors, LLC, a global asset management firm known for its China-focused exchange-traded funds (ETFs) and innovative China investment strategies, today announced the launch of the KraneShares MSCI China ESG Leaders UCITS ETF (Ticker: KESG) on the London Stock Exchange…
Jonathan Krane, CEO of KraneShares
KraneShares MSCI China ESG Leaders UCITS ETF (Ticker: KESG) Launches on the London Stock Exchange
KESG tracks the MSCI China ESG Leaders 10/40 Index, a capitalization weighted index that provides exposure to companies with high Environmental, Social and Governance ratings relative to their sector peers.
The Index consists of large and mid-cap companies domiciled in China. KESG’s index provider, MSCI, is the number one provider of ESG, Socially Responsible Investment (SRI) and corporate governance indexes based on a survey of global institutions.
China’s economy is moving from manufacturing to services. Typically, companies aligned with the “New China” economy experience greater growth than companies from China’s legacy sectors.
MSCI’s ESG methodology not only identifies more socially responsible investment opportunities, it can also be an effective filter for capturing companies that are aligned with China’s future growth trajectory.
Since its inception in 2013, the MSCI China ESG Leaders Index has outperformed the standard MSCI China Index by 58%. The 5-year annualized return of the MSCI China ESG Leaders Index was 12.34% as compared to just 7.49% from the MSCI China Index.
“We have seen a lot of investor demand for a China-focused ESG UCITS ETF,” said Jonathan Krane, CEO of KraneShares. “We are proud to partner with MSCI, a global leader in ESG indexing, to deliver the KraneShares MSCI China ESG Leaders UCITS ETF (Ticker: KESG) to our clients.”
KESG seeks to track the MSCI China ESG Leaders 10/40 Index. The MSCI China ESG Leaders 10/40 Index aims to provide exposure to companies with high Environmental, Social and Governance (ESG) ratings relative to their sector peers. The MSCI China ESG Leaders 10/40 Index consists of large and mid-cap companies in China. In order to ensure diversification, the Index is designed to limit individual constituent weights to 10% and sector weights to 40% of its composition.
China’s ESG Highlights:
Chinese domestic investors and issuers are moving fast to incorporate ESG considerations in their decision making, driven by strong regulatory initiatives to promote ESG practices and disclosures.
China’s commitment to stricter environmental mandates and conservation efforts is necessary to achieve national goals of sustained economic growth. Consequently, China now is the world leader in total renewable energy capacity, at approximately 31% of total global capacity1.
China’s economic and technological transformation drives demand for a more educated workforce. In recent years, many Chinese companies in knowledge-intensive sectors have improved their talent programs, which has in turn upgraded their MSCI ESG Rating.
Greater inclusion of China’s capital markets internationally creates more of an incentive to align shareholder rights and governance policies with global standards, paving the way for Chinese companies to develop a more diversified shareholder structure.
MSCI China ESG Leaders 10/40 Index inclusion criteria has a track record of effectively identifying growth companies within China’s new economy.
As companies with high ESG scores have proven to consistently outperform their peers in China, investors do not necessarily have to compromise returns for investing based on beliefs.
Benchmarked to an MSCI ESG Index: MSCI is the #1 index provider for ESG, Socially Responsible Investment (SRI), and Corporate governance indexes according to a 2018 survey of 1,300 participants conducted by SRI Connect and Extel.
Source : ETFWorld.co.uk