Market Overview

A New, Healthy Way To Tap Emerging Markets

A New, Healthy Way To Tap Emerging Markets

A pair of exchange-traded funds dedicated to China's booming health care investment opportunity debuted earlier this year.

KraneShares, the issuer behind one of those China healthcare funds, took the emerging markets health care investment opportunity further with the debut of the KraneShares Emerging Markets Healthcare Index ETF (NYSE: KMED).

What Happened

New York-based KraneShares is known for its lineup of China-focused ETFs, but the firm also offers ETFs with more expansive reaches across the emerging markets space. KMED is the latest addition to firm's broader emerging markets offerings.

The new ETF, which debuted Wednesday, tracks the Solactive Emerging Markets Healthcare Index. That benchmark “seeks to track the equity market performance of companies engaged in the health care sector in various emerging markets,” according to KraneShares. “The issuers include small-cap, mid-cap, and large-cap companies involved in hospital management, healthcare management, pharmaceutical manufacturing, and biotechnology, among other sub-industries.”

Why It's Important

Data suggest the emerging markets health care investment opportunity is potentially massive.

“By 2040, emerging market countries on average are projected to increase healthcare spending as percent of GDP by 24.4% compared to just 9.8% in developed markets over the same time period,” according to KraneShares. “Healthcare expenses now comprise the largest segment of household consumption in China, which has the second largest healthcare market globally. At the same time, healthcare expenditure as a percent of GDP lags developed markets in both China and broad emerging markets, indicating there is significant room for growth in the sector.”

While KMED features exposure to multiple developing economies, it's top-heavy at the geographic level as China, South Korea and combine for about 81 percent of the new ETF's country exposures. Those are three of Asia's four largest economies.

What's Next

KMED isn't the first health care ETF from KraneShares. The firm In January introduced the KraneShares MSCI All China Health Care Index ETF (NYSE: KURE), which now has $34.13 million in assets under management.

KMED charges 0.79 percent per year, or $79 on a $10,000 investment.

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