Global asset management firm Krane Funds Advisors introduced its Single-Stock Levered ETF Suite with the launch of the KraneShares 2X Long PDD Daily ETF (NASDAQ:KPDD) and the KraneShares 2X Long BABA Daily ETF (NASDAQ:KBAB) that began trading Thursday on Nasdaq.

KPDD and KBAB are structured to provide 200% of the daily percentage change of their respective underlying stocks, prior to fees and expenses. This gives investors with leveraged exposure to PDD Holdings (NASDAQ:PDD) and Alibaba (NYSE:BABA).

KPDD comes with an expense ratio of 1.26%, and KBAB has a management charge of 0.99%. Nonetheless, KraneShares has imposed a fee waiver for KBAB until Aug. 1, 2026.

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PDD Holdings is a world-leading e-commerce player with presence in more than 19 countries. Its overseas platform, Temu, outpaced Amazon’s monthly active buyers and reached $50 billion annual gross merchandise volume in 2024.

Meanwhile, Alibaba, the world’s third-largest e-commerce retailer, has increased its footprint in AI, cloud computing, logistics, fintech, and media. Its shares have recently picked up pace after it introduced its Qwen2.5 series large language model and a new AI collaboration with Apple (NASDAQ:AAPL) to include cutting-edge features on iPhones being sold in China.

Both PDD and Alibaba have been among the most prominent holdings within the KraneShares CSI China Internet ETF (NYSE:KWEB).

Leveraged ETFs like KPDD and KBAB provide an efficient way for investors to amplify their exposure to leading Chinese internet stocks. "China Internet continues to be an important global growth theme," said James Maund, KraneShares' Head of Capital Markets. "Our Single-Stock Levered ETF Suite provides a convenient way for bullish investors to gain levered exposure to top companies, including the largest China internet stocks."

These funds do, however, contain a lot of risk. They are meant for single-day trading, so their performance is best used for short-term purposes. Keeping them for more than a day can result in returns compounding in a way that could stray from twice the performance of the stock due to market conditions.

Mechanics of KPDD and KBAB

The KBAB seeks to replicate 200% of Alibaba’s ADR, on a daily basis. This is accomplished through an investment in Alibaba stock and the use of swap agreements and options to multiply returns.

In the same way, the KPDD aims to double the daily returns of PDD Holdings’ ADR. Similar to KBAB, it uses swaps and options for leveraged exposure and daily rebalancing.

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