China ETF specialist KraneShares has launched a China equity ETF with an environmental, social and governance (ESG) tilt.
The KraneShares MSCI China ESG Leaders UCITS ETF (KESG) has listed on the London Stock Exchange (LSE) with an expense ratio of 0.4%.
KESG tracks the MSCI China ESG Leaders 10/40 index, a market-cap weighted index that selects companies with the highest with ESG scores relative to their sector peers.
The 10/40 concentration constraint means each group is capped at 10% and all group entities with a weight of more than 5% should not exceed 40% of the index by weight.
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The launch of KESG is a result of KraneShares’ high client demand for a China-focused ESG UCITS ETF.
KESG is only the third ETF KraneShares has launched in Europe. The KraneShares CSI China Internet UCITS ETF (KWEB) and the KraneShares MSCI China A-Share UCITS ETF (KBA) are also listed on the LSE.
While China ETFs have been underperforming as a result of the Coronavirus outbreak, many investors see this slump as short term. Therefore, prices are likely to bounce back suggesting prices are cheap and will continue to get cheaper while the virus continues to spread globally.