Investors remain hopeful of Fed interest rate cuts this month, based on supportive economic data released Wednesday. However, further signs of economic slowing may cause investors to reconsider their existing equity portfolios, given rising risks. Investors seeking overlooked diversification opportunities within equities should consider the KraneShares Rockefeller Ocean Engagement ETF (KSEA ).
Markets wobbled on fresh concerns of job market slackening Wednesday. Job openings fell to 7.67 million on estimates of 8.1 million. While further cooling in the job market sends a favorable signal for rate cuts this month, it also warrants economic resilience concerns. Following on the heels of August’s PMI reading that revealed ongoing manufacturing contraction, investors now weigh the possibility of further economic slowing or potential recession looking ahead.
KSEA Offers Notable Sector Diversification For Your Portfolio
For investors reconsidering their equity portfolios and seeking diversification opportunities, the KraneShares Rockefeller Ocean Engagement ETF (KSEA ) is worth consideration. The fund’s strategy yields a portfolio of diversified sector weights from traditional benchmarks. It makes a strong complement to existing equity allocations and sustainability-focused portfolios.
KSEA is actively managed and seeks to invest in companies that significantly impact oceans and ocean resources, known as the “blue economy.” Investing in these companies allows Rockefeller Asset Management, the fund’s subadvisor, to deploy its proactive engagement strategy. Active engagement with companies provides the dual benefits of risk reduction and increased sustainability.
See also: Overlook Opportunity: The Blue Economy and KSEA
The fund’s strategy creates a sector profile that differs from broad equity benchmarks. This makes KSEA a strong complement to existing equity holdings as a diversifier.
Industrials (40.09%), consumer staples (15.69%), and materials (11.78%) made up the fund’s largest sectors by weight as of 07/31/24. In comparison, the MSCI All Country World Index, the fund’s broad-based benchmark, offered the highest sector exposure to information technology (24.65%), financials (16.24%), and health care (11.41%) as of the end of August.
The fund also currently trades above its 50-day Simple Moving Average and its recently established 200-day SMA. Funds trading above their SMAs are considered a “buy” for trend followers and technical traders.
Engagement at the Heart of KSEA’s Strategy
Rockefeller Asset Management has more than 30 years of ESG investing experience, more than a decade of experience investing in the ocean economic system, and a partnership with The Ocean Foundation.
Through its ocean focus, KSEA brings diversification potential to existing sustainability-focused portfolios. KSEA invests in commercial fishing, waste management, aquaculture, renewable energy, and other industries. The strategy focuses primarily on companies dubbed “ocean improvers.” These companies offer the most significant potential positive impacts for sustainability via engagement. The fund also invests in companies categorized as “ocean leaders” and “ocean solutions.”
The strategy avoids companies that endanger ocean health, such as deep-sea mining companies or offshore oil. KSEA has a management fee of 0.86%.
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