Weakness in KraneShares China InternetAndCovCllStETF's Process and People Pillar ratings limits this strategy to a Morningstar Medalist Rating of Negative. The strategy charges fees in line with its similarly distributed peers, priced within the middle quintile.  

 The strategy receives a Low Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an overweight in liquidity exposure and quality exposure compared with category peers. High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And a high quality exposure is rooted in holding stocks that are consistently profitable, growing, and have solid balance sheets. The longest-tenured manager has a wealth of experience, but other weaknesses limit it to a Low People Pillar rating. Although this strategy's parent firm still has a way to go to be a high-quality steward, it has bright spots like portfolio managers who invest a notable amount in their strategy but could focus on a bench of limited-tenure portfolio managers. As a result, the firm obtains a Low Parent Pillar.

Analyst Rating

KraneShares CSI China Internet ETF

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category benchmark on a risk-adjusted basis over the long term. KraneShares China InternetAndCovCllStETF earns a Low Process Pillar rating. 

The main driver of the rating is the parent firm's five-year retention rate of 54%, which suggests it could do more to retain its portfolio managers. The parent firm's five-year risk-adjusted success ratio of 50% also holds the rating back. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median Morningstar Risk-Adjusted Return for the period. The parent's relatively low success ratio suggests that the firm could do better across its fund lineup. 

 This strategy skews toward smaller, more growth-oriented companies compared with its average peer in the China Region Morningstar Category. Examining additional factor exposure, this fund has constantly tilted toward stocks with higher trading volumes than its Morningstar Category Peers over the past few years. More-liquid assets are easier to buy and sell without adversely moving their prices and tend to provide some ballast during market selloffs. They also are easier to sell to meet redemptions if a host of investors decide to leave the fund in a short period of time. In recent months, the strategy was more exposed to the Liquidity factor compared with its Morningstar Category peers as well. This strategy also has had a defensive tilt, with exposure to higher-quality stocks compared with peers in recent years. This means that the fund holds companies that are profitable, growing, and have solid balance sheets. High exposure to the quality factor means holding companies that are consistently profitable, growing, and have solid balance sheets. Compared with category peers, the strategy also had more exposure to the Quality factor in the most recent month. Additionally, the managers have consistently taken on more risk, demonstrated by higher volatility exposure than peers. Such exposure tends to pay off when markets are hot and to be costly when they are not. In this month, the strategy also had more exposure to the Volatility factor over its peers. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section. 

 The portfolio is overweight in communication services and consumer cyclical relative to the category average by 18.5 and 16.2 percentage points, respectively. The sectors with low exposure compared to category peers are financial services and technology, underweight the average by 14.5 and 9.8 percentage points of assets, respectively. The strategy has only reported a handful of holdings, and is in a category where the typical fund has 36.9% of assets within the top 10 holdings.

Process

KraneShares China InternetAndCovCllStETF earns a Low People Pillar rating. The primary factor behind the rating is the instability of talent across its parent firm. The firm's asset-weighted manager tenure of five years suggests it could do more to retain portfolio managers. The combined average three-year excess return of each manager also holds the rating back. It suggests that the funds they manage have lagged their respective category's average return. The parent firm's five-year success ratio of 50% further weakens the team. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median return for the period. The parent's subpar success ratio suggests that the firm could do better across its fund lineup.


Jonathan Shelon’s veteran status, with 21 years of listed portfolio management experience, brings a wealth of experience to the table. The average Morningstar Rating of the strategies they currently manage is 2.7 stars, reflecting below-average risk-adjusted performance versus category peers. Despite having a small team, the two listed managers boast 12 years of listed portfolio management experience.

People

Kraneshares has a ways to go to become an industry-standard steward, resulting in a Low Parent Pillar rating. Despite the negative rating, an area of strength of the firm is manager investment.  Over 29% of the firm's assets are covered by invested managers, in an effort to align portfolio manager and shareholder interests. Kraneshares's longest-tenured managers do not possess the same experience as management teams at other firms, a detractor from its rating. Specifically, average asset-weighted tenure within the firm is only five years.

Parent

Kraneshares China Internet And Covered Call Strategy Etf

KLIP is a fund-of-fund that tracks an index of China-based internet stocks and sells one-month, at-the-money call options on the full amount of the portfolio.

The KraneShares China Internet & Covered Call Strategy ETF employs a covered-call strategy to provide attractive yields and capped participation in the KWEB ETF. Despite its 61.7% headline yield, total returns for the fund has been far lower, due to poor performance from KWEB and the utilization of ROC. Overall, I continue to recommend investors avoid this amortizing fund, as the high yield is just a mirage.

KLIP: Continue To Avoid This Amortizing Fund

KraneShares MSCI Emerging Markets ex China Index ETF

The U.S. stock market has done so well that many investors may have forgotten about the rest of the world. Emerging markets, however, have a case to get back into investors' portfolios.

Emerging Markets: Honing a China Allocation

Last year brought about a rise in covered call strategies as investors sought to maximize income potential in uncertain times. An area of opportunity often overlooked is covered call strategies on Chinese stocks.

KLIP Generates Income on China Tech Stock Volatility

The Kraneshares China Internet And Covered Call Strategy ETF has outperformed the KraneShares CSI China Internet ETF by 45% in its first year, thanks to option income. KLIP follows a covered call strategy, which has generated 68% annualized income returns since inception by selling slightly out-of-the-money call options on KWEB. With Chinese tech stocks looking undervalued and under-owned, a contrarian rally should allow the KLIP to generate outsized returns.

KLIP: High Income And Cheap Valuations Suggest Strong Returns

NEW YORK, Jan. 08, 2024 (GLOBE NEWSWIRE) -- KraneShares, a leading global ETF provider specializing in China, climate, and uncorrelated assets, today announced a monthly distribution for the KraneShares China Internet & Covered Call Strategy ETF (Ticker: KLIP) in the amount of $0.625001 per share, representing a Monthly Distribution* of 3.81% and a current Distribution Rate** of 45.85%. The Fund's current 30-day SEC Yield, which excludes options income, is 1.26%.

KraneShares China Internet & Covered Call ETF (Ticker: KLIP) Distributes 3.81% In December

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This ETF offering could become next year's hot product

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London-based investment research firm Macro Hive highlighted that one of the potential gray swans in 2024 that could rock markets is China, as quoted on Business Insider.

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Covered call ETFs have proven to be one of the brighter spots in the ETF landscape this year. Offering an income added on top of an underlying index, covered call strategies were once far more exclusive.

How Covered Call ETFs Like KLIP Handle NAV

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Amid President Xi Jinping's visit to the U.S., two major Chinese firms saw exciting earnings beats. Both Tencent (TCEHY) and JD.com (JD) reported Q3 financial results that beat analysts' expectations.

Tencent, JD Beat Q3 Expectations in China Boost

To mitigate interest rate volatility, fixed income investors may need to diversify their streams with other sources. One possible option is the KraneShares China Internet and Covered Call Strategy ETF (KLIP), which offers a monthly distribution.

Diversify Your Income With This China-Focused Covered Call ETF

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The US economy is facing challenges including potential stagflation and high consumer debt, which could impact the stock market. China's economy is showing signs of a robust recovery, making Chinese equities an attractive investment opportunity. Longing the KLIP-covered call ETF and shorting US indices like SPY and QQQ provide a balanced approach to capitalize on these divergent economic trajectories.

Long China (KLIP) Short U.S. (SPY/QQQ) Pair Trade Moving Into 2024

China's economic outlook has been something of a mixed bag over the last several weeks as the country's real estate uncertainty lingers. That said, China investing remains a major consideration for investor portfolios in the U.S. and around the world.

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Back-to-back years of celebration for VettaFi's research! Last week, VettaFi received the Best U.S. ETF Research award from ETF Express, a dedicated ETF news outlet, at an awards reception in New York.

VettaFi Repeats as Best ETF Research Award Winner

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Hiya VettaFi Voices! On Friday we're hosting the Income Strategy Symposium, so keeping in the spirit of that event, I wanted to know: Where you see the best places to find income in the markets today?

VettaFi Voices On: Finding Income

In KraneShares' robust suite of ETFs is a unique strategy that uses volatility to generate income for investors. It all starts with the firm's flagship ETF, the KraneShares CSI China Internet ETF (KWEB).

How KraneShares Uses Volatility to Generate Income

Option-based ETFs have experienced significant asset growth, reaching over $45 billion by the end of 2022. Ultra-high yielding products that harvest option premium from volatile securities are gaining popularity, such as the KraneShares China Internet & Covered Call Strategy ETF. Although the KLIP ETF pays an ultra-high 50% distribution yield, total returns for the fund are much more modest.

KLIP: Yet Another Ultra-High Distribution Yield ETF

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While developed U.S. and non-U.S. markets indexes were up year to date through October 20, emerging markets benchmarks were treading water. The two largest emerging markets ETFs are the Vanguard FTSE Emerging Markets (VWO) and the iShares Core MSCI Emerging Markets (IEMG).

Chart of the Week: Reducing Emerging Markets Risks

China equities have underperformed this year when compared to other global markets, due to the economic slowdown and ailing real estate sector in the jurisdiction. Geopolitical tensions and political risk are impacting the valuation of Chinese equities. The Kraneshares China Internet And Covered Call Strategy ETF has performed well by utilizing a covered call strategy to offset losses and generate positive returns.

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Imagine stocks or funds that pay out their dividends once a month! Unlike waiting for quarterly, semi-annual, or (ugh) annual payouts, your angst waiting for money is reduced by 300% or more! These August U.S. exchange-traded monthly-paid (MoPay) dividends, upsides, and net gains include: 1. Stocks by yield (85); 2. Stocks by price-upside (30); 3. Closed-End-Investments, Exchange-Traded-Funds & Notes (CEICs/ETFs/ETNs) by yield >8.74% (80). Items: 1. Top MoPay stock gains; 2. Overall best MoPay gainers; 3. Funds vs.Equities; 4. Fund risks/rewards. All per prices as of 8/15/23.

83 Monthly Paying Dividend Stocks And 80 Funds For September

China is looking to revive economic growth, but in the meantime, exchange-traded fund (ETF) investors can obtain monthly income while awaiting future upside in the country's tech sector with the KraneShares China Internet and Covered Call Strategy ETF (KLIP).

This Covered Call ETF Provides Monthly Income and Tech Upside

KLIP is a covered call strategy ETF that purchases shares of KWEB and simultaneously writes call options. This article will teach you how they write calls to generate premium income and uses examples to demonstrate this practice. Overall, KLIP has a reasonable fee for the strategy of both the fund and the underlying asset it holds.

KLIP: Understanding The Covered Call Strategy And How It Works

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Imagine stocks or funds that pay out their dividends once a month! Unlike waiting for quarterly, semi-annual or (ugh) annual payouts, your angst waiting for money is reduced by 300%, or more! These August U.S. exchange-traded monthly-paid (MoPay) dividends, upsides, and net-gains include: 1. Stocks by-yield (85); 2. Stocks by price-upside (30); 3. Closed-End-Investments, Exchange-Traded-Funds & Notes (CEICs/ETFs/ETNs) by-yield >8.74% (80). Items: 1. Top MoPay stock gains; 2. Overall best MoPay gainers; 3. Funds vs. Equities; 4. Fund risks/rewards. All per prices as of 8/15/23.

85 Monthly Paying Dividend Stocks And 80 Funds For August

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Once a crucial engine of economic growth for the world's second-largest economy, China's real estate sector currently finds itself grappling with a crisis. Investors view the sector's revival as being important for the recovery of China's economy.

Country Garden Crisis Puts China ETFs in the Spotlight

News of China's commitment to greater support for economic recovery at this week's Politburo carried Chinese stocks higher this week. Chief amongst those making sizeable gains are the technology giants as China pledges support for the sector in the second half.

As China's Tech Sector Climbs, KLIP Enhances With Income

KLIP, a covered call ETF focusing on Chinese internet companies, offers a massive 51.2% distribution yield but faces significant capital losses and distribution cuts. The fund is very risky, and broadly unsuitable for many investors. A look at the fund, its strategy, and most important characteristics follows.

News for Kraneshares China Internet And Covered Call Strategy Etf ETF (KLIP)