The combination of a middling Process Pillar rating and a Low People Pillar rating limit  KraneShares CSI China Internet ETF to a Morningstar Medalist Rating of Neutral.  The portfolio maintains a sizable cost advantage over competitors, priced within the second-cheapest fee quintile among peers.  

 The team managing the passive strategy earns a Low People Pillar. The strategy gets an Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a considerable overweight position in volatility exposure and has a substantial underweight in yield exposure compared with category peers. High volatility exposure is attributed to companies with a higher standard deviation of returns. And a low yield exposure is rooted in holding fewer stocks with high dividend or buyback yields -- instead, typically holding stocks in an early stage of development. Even though the strategy's parent organization has some investor-friendly attributes like portfolio managers who invest a substantial amount in their strategy, portfolio managers with limited tenures at the firm holds it back. As a result, the firm obtains a Low Parent Pillar.

Analyst Rating

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 CSI China Internet ETF earns an Average Process Pillar rating. The leading factor in the rating is that this fund tracks an index. Historical data, like Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. The process is limited by the fund's weak long-term risk-adjusted performance. This can be seen in its five-year alpha calculated relative to the category average, which suggests that the process has struggled over that period.

The investment strategy as stated in the fund's prospectus is:  The investment seeks to provide investment results that correspond generally to the price and yield performance of the CSI Overseas China Internet Index.  The fund will invest at least 80% of its net assets in instruments in its underlying index or in instruments that have economic characteristics similar to those in the underlying index. The index is designed to measure the equity market performance of investable publicly traded "China-based companies" whose primary business or businesses are in the Internet and Internet-related sectors, and are listed outside of Mainland China, and as determined by the index provider. The fund is non-diversified. 

 The portfolio is overweight in communication services and consumer cyclical relative to the category average by 18.9 and 16.3 percentage points, respectively. The sectors with low exposure compared to category peers are financial services and technology, underweight the average by 13.2 and 10.8 percentage points of assets, respectively. The portfolio is composed of 33 holdings and is relatively concentrated. In particular, 62.1% of the strategy's assets are housed within the top 10 holdings, compared with the category’s 36.3% average.

Average

Process

Kraneshares’s team receives a Low People Pillar rating. The largest detractor from 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 five-year excess return of each manager also detracts from the team. It suggests that the funds they manage have underperformed their respective category's average return. The parent firm's five-year success ratio of 33% further detracts from 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 relatively low success ratio suggests that the firm could do better across its fund lineup.

People

Kraneshares fails to meet industry-standard stewardship qualities, culminating in a Low Parent Pillar rating. Aside from the overall view, portfolio managers at Kraneshares have made a notable effort to align their interests with shareholders' by taking a personal stake and investing alongside them. Nearly 33% of the firm’s assets are represented by a manager who invests in their respective product. Longest-tenured managers’ average asset-weighted tenure within the firm is slim, five years, compared with peer firms. This contributes negatively to the rating, as the current managers have limited experience running strategies at the firm.

Parent

KraneShares CSI China Internet ETF

KWEB tracks a market cap-weighted index composed of overseas-listed Chinese Internet companies.

ARK Innovation ETF

ARK Web x.0 ETF

Xtrackers Harvest CSI 300 China A-Shares ETF

Alibaba

KE Holdings

Invesco China Technology ETF

New Oriental Education & Technology Group

iShares China Large-Cap ETF

Meituan

Pinduoduo Inc - ADR

TAL Education Group

Tencent Holdings Limited

The strengthening in the Chinese yuan spurred investors to rotate back into growth and consumer names. Whether the rotation play into value and cyclical has halted remains to be seen. Tencent Holdings faced several negative developments in the past week. Yet, shareholders were steadfast in their commitment to the social media and gaming giant.

Chinese Internet Stocks In Dip-Then-Rebound Mode Amid Jittery Sentiment

KraneShares CICC China 5G & Semiconductor Index ETF

Kraneshares MSCI China Environment Index ETF

KraneShares SSE STAR Market 50 Index ETF

KraneShares MSCI All China Health Care Index ETF

ETF investors looking for growth and innovation in China, can turn to the KraneShares Krane China Innovation Strategy. The strategy consists of a model portfolio that seeks to provide investors exposure to themes that capture China's innovation in science and technology.

Cover All the Hot Bases in Chinese Equity with This Model Portfolio

Invesco QQQ

Jack Ma reappeared in good spirits, but efforts were made to maintain a low profile, placating investors wary of renewed attention on the fallen billionaire. A gaffe made by Meituan CEO could potentially result in the lifestyle services company take over the role as the new regulatory whipping boy.

Chinese E-Commerce Stocks Plunged As Alibaba Fired Warning Shots At Rivals

Etsy

PayPal

ARK Space Exploration & Innovation ETF

Tesla

Elon Musk is hailed as one of the most important innovators today. For fans of the "technoking," here are seven Elon Musk stocks to buy.

7 of Elon Musk's Favorite Stocks (And Why You Should Care)

adidas AG

Baidu

JD.com

iShares MSCI China ETF

NIKE

Trip.com

A plethora of positive data points reflecting a buoyant Chinese economy was released late in the week.

Spring-Loaded Chinese Internet Stocks Build On Bullish Macro Data

Global X MSCI China Information Technology ETF

Direxion Daily CSI China Internet Index Bull 2X Shares

The Technology industry has been rapidly evolving in China over the past decade, presenting investors with plenty of investment opportunities.

The Rise Of China Tech: Are Investors Missing Out?

Guangdong and Zhejiang, home to Tencent and Alibaba respectively, achieved higher than the national average GDP growth - indicative of the economic contribution of the two Chinese internet giants.

The Great Reset For Chinese Internet Giants

Cloudera

Editas Medicine

Altria

Roku

VanEck Low Carbon Energy ETF

Tencent Music Entertainment Group 

Broader markets be at all-time highs, but there are still opportunities for the coming months. Here are seven stocks to buy this May.

7 Stocks to Buy for May

Invesco Golden Dragon China ETF

Exchange-traded funds linked to Chinese businesses rallied Tuesday after a stronger-than-expected report on the country's service sector was released Monday night. The Invesco Golden Dragon China ETF gained 3.7% midday, and the KraneShares CSI China Internet ETF was up 3.1%.

China ETFs jump on strong economic data

iQIYI

Vipshop Hlds

Forced liquidations and threats of regulation dislodged the rally in Chinese tech stocks this week, but it's nowhere near over, ETF Trends CEO Tom Lydon says.

China tech stock collapse is 'definitely a buying opportunity,' market analyst says

On this week's “ETF Edge,” ETF Trends' CEO, Tom Lydon, along with Brendan Ahern, CIO of KraneShares, and Direxion Head of Product David Mazza, unpacked the action in Chinese technology stocks with CNBC's Dominic Chu. Last week featured a massive liquidation by hedge fund Archegos Capital Management and concerns over rising regulatory risks in the [.

ETF Edge: Tom Lydon Talking Chinese Tech ETF Action

China's mobile payment popped up in the early 2010s, exploded in 2014-2016, and has now reshaped China's payment landscape.

Leave Your Wallet Behind In China

This week saw the KraneShares CSI China Internet ETF (KWEB) and the iShares MSCI China ETF (MCHI) down a few points. On “The Claman Countdown” on Fox Business Network on Wednesday, ETF Trends CEO Tom Lydon joined fill-in host Cheryl Casone to discuss why China may be a problem for ETF investors.

Fox Business: Tom Lydon Talks China ETFs Under Pressure

China country-specific exchange traded funds, notably those with a higher tilt toward technology stocks, have slumped as the U.S.-China tensions escalate and Beijing implements anti-monopoly measures against large internet names. Among the best performing non-leveraged ETFs of Wednesday, the KraneShares CSI China Internet Fund (NasdaqGM: KWEB) declined 8.5% and Invesco China Technology ETF (NYSEArca: CQQQ) [.

China ETFs Struggle as Tensions Rise with the West

Chinese technology sector-related exchange traded funds have come under increased pressure as China's antitrust regulator aimed its sights on several internet names. Over the past month, the Invesco China Technology ETF (NYSEArca: CQQQ) declined 13.5%, and the KraneShares CSI China Internet Fund (NasdaqGM: KWEB) decreased 14.4%, while the broader Xtrackers CSI 300 China A-Shares ETF [.

Antitrust Scrutiny Hits China Technology, Internet ETFs

China is the fastest growing major economy in the world with rising internet and mobile penetration, creating strong tailwinds for Chinese internet companies. China is growing so fast it's leapfrogging stages of development that the US went through. Consequently, there aren't a lot of strong incumbent competitors facing off against Chinese tech companies.

KWEB: The Rise Of The Chinese Internet

Mainland investors continued to lap up the "discounted" shares that Americans were forced to sell due to the executive order. Buying enthusiasm improved further after the Trump administration shelved plans for an investment ban on the Chinese internet giants.

Alibaba: Beware Of Rumors - Even From The Longs

In a positive start to 2021, the representative ETFs of Chinese companies rallied by a wide margin over with their respective U.S. counterparts. The outperformance came despite the dark cloud of investment bans on Alibaba and Tencent, as well as usage prohibition of certain Chinese apps in the U.S., including Alipay and WeChat Pay.

Alibaba's Bottoming Despite Odds, Baidu's Dog Days Are Over

Emerging Markets Internet & Ecommerce ETF

After the steep sell-off in Alibaba (NYSE: BABA) on antitrust issues from Beijing, China technology sector-related exchange traded funds are gaining momentum. Among the best performing non-leveraged ETFs of Wednesday, the Invesco China Technology ETF (NYSEArca: CQQQ) increased 3.9% and the KraneShares CSI China Internet Fund (NasdaqGM: KWEB) advanced 3.8%.

Bargain Hunters Help Chinese Tech ETFs Rally

Franklin FTSE China ETF

SPDR S&P China ETF

Shares of Alibaba Group Holding Ltd. were on track for their steepest daily decline on record Thursday, denting exchange-traded funds with big holdings of the Chinese e-commerce company.

China-linked ETFs fall as Alibaba shares skid nearly 14%

Global X China Consumer ETF

WisdomTree China ex-State-Owned Enterprises Fund

China risks are on multiple fronts—from the technology rivalry with the U.S. to more regulatory scrutiny inside China of internet giants.

China Continues to Be Risky for Investors. What to Expect in 2021.

NetEase

Several lingering drivers for the equity markets continued make a splash last week. Baidu and NetEase scored large gains. Coincidentally, the duo is deploying AI into different areas.

NetEase's AI Gems Are Sparkling Like Baidu

China wants to be the world leader in many things and has chosen to compete within world markets, but China also wants to maintain control over its people.

China And The Dilemma Of World Leadership

The back-and-forth between tech/WFH names and reopening/cyclical counters has been playing out globally, creating large price swings. Speculations that the toughened regulatory stance on internet platforms was directed at Jack Ma spooked Alibaba's shareholders, worried of escalating retaliatory actions on the internet titan.

Alibaba Emerging As A Value Play, Tencent Navigates Regulatory Minefield

UP Fintech China-US Internet Titans ETF

Alibaba raked in a record-breaking $56 billion in sales in the first 30 minutes of Singles' Day.

News for KraneShares CSI China Internet ETF ETF (KWEB)