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

| About: Guggenheim China (YAO)

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.