Claymore's New China ETF Dominated by State-Owned Mastodons

Monday, the respected Claymore fund group launched a new exchange-traded fund for China. It aims to cover all accessible Chinese stocks regardless of size, traded as Global, American, or International Depositary Receipts; H shares or Red Chips in Hong Kong; or N shares in the USA. Unlike Jim Rogers, most of us cannot figure out how to invest in Shanghai or Shenzhen directly. Claymore Alpha China ETF has ticker symbol YAO.

While aimed at all market cap sizes, YAO limits itself to stocks with over a half billion market capitalization. This means the usual Chinese state-owned mastodons dominate the share list. Moreover, the fund (with a lowish 0.8% fee) engages in passive index investing. That means if a share held by the ETF gets into trouble, it will continue to be held unless it is de-listed or bankrupt.

If you have any notions (as I do) of where the Chinese economy will produce profits for individual companies and sectors, you do not want to own the YAO ETF.

Comments

[just_anothe...:]

"That means if a share held by the ETF gets into trouble, it will continue to be held unless it is de-listed or bankrupt".

What a stunning discovery, but wait... isn't this what ALL the index tracking funds do? The point is if you like that country/sector exposure overall you can buy into these passively managed funds with low management fees, you can also spare yourself from those active fund managers who can talk the world down but can't pick a handful of stocks to beat their own benchmarks.

Oct 21 09:11 AM

[Peggo:]

Thanks won't be investing in Yao, how about TAN???

Oct 21 09:34 AM

[airbossnj:]

My take is that this article doesn't tell both sides of a story and this is why you all must do your own homework. Simply read the prospectus and ask yourself some questions. Theres a gamble with all investments and if its not a gamble then its not an investment.

Oct 21 11:43 AM

[Sara67:]

Just sounds a bit risky like all investing.

Don't we send enough money to China now by buying all the stuff they make? If we ever go to war with China, Walmart will go under since all of that stuff is made in China.

Oct 22 12:03 AM

[goober1:]

You dinky dao, bucu!

Oct 22 04:58 AM

[jimstam:]

Over half of YAO holdings value is similar to FXI.

I prefer to buy a combination of PGJ and HAO and avoid large state-owned banks and gain exposure to non-state owned small caps more closely tied to Chinese economy. All have about 0.7% mgmt. fee.

Oct 22 11:13 PM

[daloksingh:]

Why don't you check the charts of the big Chinese banks listed as H shares in Hong Kong using bigcharts.com. All have made strong 52 week high. Look at our mess and I cannot but agree with Jim Cramer in his new book that US is, whether we like it or not, no more at the center of the world

Oct 25 01:47 AM

[alwayson:]

"If you have any notions (as I do) of where the Chinese economy will produce profits for individual companies and sectors"

We are listening. Please elaborate.

Oct 26 02:05 PM