KraneShares MSCI China ESG Leaders Index ETF (KESG) is an exchange-traded fund that seeks to track the performance of the MSCI China ESG Leaders 10/40 Index (Net), providing exposure to large- and mid-cap Chinese companies with high environmental, social, and governance (ESG) ratings relative to their sector peers; the index applies diversification limits of 10% per constituent and 40% per sector to mitigate concentration risk. Launched on July 29, 2020, and listed on the NYSE Arca, the ETF holds approximately 188 securities across sectors including consumer discretionary, communication services, financials, health care, and industrials, with top holdings such as Alibaba Group Holding Ltd., Tencent Holdings Ltd., and China Construction Bank Corp. Krane Funds Advisors, LLC, founded in 2013 and headquartered in New York, serves as the investment adviser, managing a suite of China-focused ETFs with total annual operating expenses of 0.59% for KESG.
The ETF targets institutional and individual investors seeking ESG-aligned exposure to China's equity markets, where regulatory pushes for environmental mandates, workforce development, and improved governance have elevated high-ESG companies' performance relative to peers. Geographically, it focuses on China-based issuers, including those listed in Hong Kong and the U.S., capturing new economy growth in technology, renewables, and consumer sectors amid China's global renewable energy leadership.
In recent developments, KraneShares has expanded strategically through partnerships, including a March 2025 distribution alliance with InspereX for ETF access via independent broker-dealers and banks; a July 2025 model portfolio collaboration with BlackRock leveraging KraneShares' thematic ETFs; and December 2025 cross-listings of select U.S. ETFs on the Abu Dhabi Securities Exchange in partnership with ICBC UBS International, alongside NYSE Arca. The firm also launched pre-IPO private funds in October 2025 on Schwab and Fidelity platforms, approved for accredited investors targeting companies like ByteDance and xAI, and expanded its single-stock levered ETF suite with KBDU in November 2025. Note that while a UCITS version of the KESG strategy was terminated in 2023 due to low assets under management, the U.S.-listed KESG remains active as of late 2025.