In a challenging market environment, diversification could prove beneficial for investors. For investors seeking overlooked equity diversification opportunities, the KraneShares Rockefeller Ocean Engagement ETF (KSEA ) is worth consideration.
The outlook for U.S. equities appears uncertain this year, as trade wars, geopolitical risks, and economic policy volatility rises. The short- and longer-term inflationary and economic impact of tariffs is unknown. However, the Federal Reserve recently lowered GDP estimates for this year to 1.7% from 2.1%. Fed Chair Jerome Powell discussed uncertainty and tariffs in comments after the most meeting.
“We’re at a stage where we’re still very uncertain about what will be tariffed, for how long, at what level,” Powell said, reported by NPR. “We’re going to have to wait and see all of that.”
In an environment of enhanced uncertainty and market volatility, with recession risks on the rise, diversification becomes increasingly important. While many investors are rushing to the safety of bonds, diversifying existing equity portfolios is worth consideration.
Enhance Your Equity Portfolio's Diversification Potential With KSEA
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.
Through its ocean focus, KSEA brings diversification potential to portfolios. The top sector exposures for KSEA were industrials at 39.47% weight, consumer staples at 17.13%, and materials at 11.53% as of February 28, 2025. This is a markedly different profile from equity benchmarks like the S&P 500, with its overweight to information technology. The result is differentiated performance from benchmark equity indexes like the S&P 500.
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.
Current top holdings within the fund include Waste Management (4.08% weight), Crown Holdings (3.81%), and Teledyne Technologies (3.74%) as of March 26, 2025. KSEA has a management fee of 0.86%.
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