Kraneshares MSCI One Belt One Road Index ETF (OBOR) seeks to track the MSCI Emerging and Frontier Markets ex GCC Countries ex Controversial Weapons ex Tobacco ex Thermal Coal ex Oil Sands Index, which measures the performance of companies in emerging and frontier markets that are expected to benefit from China's Belt and Road Initiative infrastructure development program across Asia, Europe, and Africa.
How It Works
OBOR uses a passively managed, market-capitalization-weighted approach that mirrors its benchmark index. The fund selects companies from emerging and frontier markets that are positioned to benefit from Belt and Road Initiative projects, including infrastructure, transportation, energy, and telecommunications sectors. Holdings are weighted by market cap and rebalanced quarterly to maintain alignment with index changes. The strategy focuses on countries along historical Silk Road trade routes and modern infrastructure corridors.
Key Features
- Unique exposure to Belt and Road Initiative beneficiaries across 65+ countries spanning Asia, Europe, and Africa
- Targets infrastructure-heavy sectors like utilities, materials, and industrials often underrepresented in broad emerging market ETFs
- Zero expense ratio makes it cost-competitive for accessing this specialized emerging markets infrastructure theme
Risks
- This ETF can lose significant value if China's Belt and Road Initiative faces political opposition or funding cuts, reducing infrastructure investment
- Concentrated exposure to emerging and frontier markets creates heightened currency, political, and liquidity risks compared to developed market ETFs
- Infrastructure and commodity-heavy sectors are cyclical and could decline 40-50% during global economic downturns or commodity price crashes
Who Should Own This
Best suited as a satellite holding (5-15% of portfolio) for aggressive investors with 7+ year time horizons seeking exposure to China's infrastructure development theme. High risk tolerance required due to emerging market volatility and sector concentration. Appropriate for investors wanting to diversify beyond traditional emerging market ETFs into infrastructure beneficiaries.