Chindia ETF Exposes Investors to 40% of World Population

Looking for an exchange-traded fund which allows investors to easily invest in 40% of the world's population? The First Trust family of ETFs rolled out the Chindia ETF (FNI), which splits the fifty companies in its ETF basket between China and India.

The weighting of the companies in the ETF is creative and unique. The top three companies for each country based on liquidity are weighted at 7%, the next three at 4%, the next three at 2% and the remaining companies in the basket weighted equally. The ETF will be rebalanced semi-annually and the ETF has an expense ratio of 0.60%,

This weighting scheme is perhaps an improvement over the market cap weighting of say the iShares India ETN (INP), where about 35% of the basket goes to three companies; Infosys, Reliance and ICICI Bank. For the China iShare (FXI) the top 5 companies come to about 40% of the basket. Maybe FNI is a better option than a combination of FXI and INP.

Comments

[Curt Smith:]

I'm concerned and curious and wanting to understand the many complicated forces in play:
- Chinese banks turned loose to buy foreign stocks. Rumor had it that the jump in the FXI was the banks buying. Not exacly spreading their risk eh?
- Goldman Sacks shorting the chinese ETFs and issuing a warning after they did so. Nice guys.
- Articles in China suggesting a full float of the yuan is a week away or soon. What effect does this have on the Bank purchases, the price of the FXI?

What's your thoughts on these issues? The near term price of the FXI, medium term etc?

tnx curt

2007 May 16 09:41 AM

[light1moonhere:]

Do you read Chinese? I wish I could see the aticle. Was it in the China Daily? No one here has read that or mentioned it at all.

2007 May 31 03:07 PM

[Lei Yang:]

Where are the "Articles in China suggesting a full float of the yuan is a week away or soon"?

2007 May 16 09:48 AM

[Nidhi Kadalbal:]

Agree that the weightings in FNI is a creative one. Here is a comparative analysis of India funds.

nidhishodhane.blogspot.../

2007 May 30 10:12 PM