Claymore Eyes China-Sectors For New ETFs
December 03, 2009
Claymore Securities is taking steps to expand its lineup of China-linked exchange-traded funds with the registration of three new sector-based China ETFs.
All three leading indexes have a similar free-float adjusted market-weighted methodology that calls for companies to have an initial market cap of $200 million for inclusion in the indexes and maintain a minimum market cap of $150 million at rebalancing. They all will charge 0.70 percent in annual expenses.
In addition, none of the indexes includes China A-shares or B-shares, which are securities either restricted to foreign investors or that are relatively illiquid listed on the Shanghai and the Shenzhen Stock exchanges.
The Claymore China Technology ETF will track the AlphaShares China Technology Index, which invests in publicly traded companies of all capitalization sizes in the GICS Information Technology sector that are headquartered in China, Hong Kong or Macau. As of Oct. 31, the index comprised 34 names. Individual securities cannot carry a weight of more than 10 percent in the index.
The Consumer ETF will track the AlphaShares China Consumer Index, which invests in publicly traded companies operating in the GICS Consumer Discretionary and Consumer Staples sectors that are headquartered in China, Hong Kong or Macau. The index held 85 securities as of Oct. 31, and individual weighting was capped at 5 percent.
Claymore's take on China's consumer sector will go head-to-head with newcomer Global X China Consumer ETF (NYSEArca: CHIQ), which launched this week.
CHIQ comes with a slightly cheaper price tag of 65 basis points and a smaller portfolio comprising 40 stocks. But both consumer-linked funds hope to capitalize on China's growing domestic consumption story as emerging wealth in the country boosts a massive consumer class.
Claymore's Infrastructure ETF will track the AlphaShares China Infrastructure Index, which invests in equities of companies that derive most of their revenues from the development, management and ownership of infrastructure in China, Hong Kong or Macau. At the end of October, it comprised 61 companies with individual positions being weighted of no more than 5 percent.
There are currently no competing funds in this category in the U.S. In Hong Kong, however, iShares offers the iShares CSI A-Share Infrastructure Index ETF, a fund that tracks the performance of domestically listed China A-Shares.
Paul and Ugo discuss the rumors surrounding the SEC's new approach to passive ETFs and whether investors have learned any lessons from the recent moves in gold.See All