Global X Management Company expanded their ETF offerings today (12/01/2009) with the launch of Global X China Consumer ETF (CHIQ) and Global X China Industrial ETF (CHII). These are the first of six China sector ETFs planned by the firm.
The new ETFs will have an expense ratio of 0.65%. The underlying indexes use a capped weighting methodology whereby the percentage weighting of each constituent is capped at 4.75%. The weightings will be adjusted twice a year. Excess weight is allocated proportionally to the constituents whose percentage weight is not capped.
This methodology should help provide a true sector representation without the extreme company overweighting found in many popular ETFs like the Select Sector SPDRs. Only stocks which are tradable for foreign investors are eligible for inclusion. Index members must either be domiciled in China or have their main business operations in that country.
Global X China Consumer ETF (CHIQ) (CHIQ summary) will track the S-BOX China Consumer Total Return Index developed by Structured Solutions Ag specifically for this ETF. The index fact sheet (pdf) shows 40 constituents with the largest nine capped at 4.75% each. Top holdings include New Oriental Education, Ling Ni Co, Denway Motors, China Yurun Foods Group, Parkson Retail Group, Sinopharm Group, Want Want China Holdings, Dongfeng Motor Group, and Tingyi Holdings. Top industry representation according to the CHIQ fact sheet (pdf) includes retailing 28.6%, food 21.9%, services 20.5%, autos 12.0%, and health care 7.9%.
Global X China Industrial ETF (CHII) (CHII summary) will track the S-BOX China Industrial Total Return Index. The CHII index fact sheet (pdf) shows 31 constituents with the largest 10 capped at 4.75% each. Top holdings include Anhui Conch Cement, Shanghai Industrial Holdings, China COSCO Holdings, China Communications Construction, China Shipping Development, Metallurgical Corporation of China, China Railway Group, China Railway Construction, BYD Co, and China National Building Material. Top industry representation according to the CHII fact sheet (pdf) are engineering and construction 26.7%, industrial equipment 25.9%, transportation 21.9%, building materials 20.0%, and industrial services 5.5%.
Global X plans to launch four more China sector ETFs in the next few weeks. These are included in the prospectus dated 11/24/09 and will cover the energy, financial, technology and materials sectors. They will also be based on S-BOX indexes representing the respective sectors.
Disclosure covering writer, editor, and publisher: No positions in any of the securities mentioned. No positions in any of the companies or ETF sponsors mentioned. No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.