KraneShares electric cars in Europe
KraneShares, the New York ETF provider majority owned by CICC, the Chinese state-owned bank, is launching its American electric cars ETF in London. The US fund currently has $240M under management.
The KraneShares Electric Vehicles & Future Mobility ESG Screened UCITS ETF (KARS) tracks the Bloomberg Electric Vehicles ESG-Screened Index.
The index is composed of companies that make “significant revenue” from electric cars, batteries, navigation systems, lithium and copper mining, and hydrogen fuel cells. The index is built by Bloomberg’s analysts, which scrape public documents – including a key word search – to determine which companies fit the bill. The index is made of 32-odd companies, which get market weighted. The weights of the biggest companies are capped at 8%.
The fund charges 0.72%.
Bernie’s commentary – differences between Europe and the US
KraneShares is a real success story in the United States. Thanks to its focus on niche areas left alone by BlackRock – Chinese sectors, carbon credits – it has swelled its assets to over $9.5 billion, with most of that money coming in the last four years. Better yet – it manages to keep its fees high. Its weighted average fee in the US is 0.70%. By contrast WisdomTree’s average US fee is just 0.46%.
In Europe, KraneShares has a small but growing presence. It currently has about $560M under management, almost all of which is in its China Internet ETF (KWEB). However it is still early days. Naturally, the company is trying to figure out what it can offer next. And bringing its electric cars ETF, which has seen success in the US, seems like a logical step.
But while it seems like the logical step, I’m not fully sold that it is the right one. European ETF providers have already begun building out on this waterfront, with over $1 billion in electric cars ETF. Lyxor MSCI Future Mobility ESG Filtered UCITS ETF has $340M. The iShares Electric Vehicles and Driving Technology UCITS ETF has $660M. They charge 0.45% and 0.40% respectively.
What’s unclear to me is how KARS intends to compete with Lyxor and iShares, given both the difference in fees and the difference in sales networks that existing European providers will have. Looking at the funds, I’m not sure I see an answer.
Note: Anybody who notices that the image i chose does not represent an electric cars, unfortunately the classic cars still look so much better, I look forward to the day when an electric car is poster worthy!